The folks at Adobe recently put out their holiday season shopping forecast, based on one trillion visits to US retail websites. Yes, you read that right – one TRILLION visits to retail websites in the country. And some of the key predictions include:
- Online holiday spend will surpass $189B (up 33% YoY)
- Black Fri: $10.3B (39% YoY); Cyber Mon $12.7B (35% YoY)
- 42% of all online shopping done from smartphones (up 55%)
- Small retailers ($10-$50M): +107% daily revenue boost for season
- 26% of consumers say knowing the election outcome will impact their holiday spend*
These are just a few of the interesting data points in the forecast. And to get a little more insight into the numbers I spoke with Vivek Pandya, Adobe’s Senior Digital Insights Manager. Below is an edited transcript of a portion of our conversation.
Interview with Vivek Pandya of Adobe
To hear the full conversation click on the embedded SoundCloud player.
Small Business Trends: What are some of the big predictions coming from your data on online sales this holiday season?
Vivek Pandya: That number that we start off with, 189 billion that’s our main projection. And that is about two years’ worth of growth, online growth, compressed into one season. It’s really mind bending to think about, just because you think about all these different companies and how essentially prepped and ready they need to be in order to fulfill this level of volume. I mean, they’ve had a bit of practice with it earlier in the month because we saw growth levels spiking in March and April and peaking in May. But this is almost a couple of those early pandemic months combined. And so it’s just kind of staggering to see that.
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And then when you contextualize it in terms of what we’re assuming, because this wasn’t just another year, obviously for us to forecast. This was, imagine all these factors that could play into more spend, less spend. So then when we thought about our main likelihood scenario, it was this $189 billion figure that you’re seeing there. Now, when we think about how things could change if more stores decided to close, we’ve heard some stories saying that they’re going to be closing for Thanksgiving. We see more of that as they try to manage case … cases rising, things like that. And then if we see an additional level of stimulus that we know impacts things positively, in terms of commerce transaction, that number could hit upwards of $200 billion. So it’s really the online landscape’s biggest test in being able to essentially continue the momentum of retail, even though we’re facing a season like we haven’t ever seen before.
Small Business Trends: And that 189 billion, that’s strictly online.
Vivek Pandya: That’s right.
Small Business Trends: That’s just an incredible number. And then that last bullet point under e-commerce outpacing overall sales growth, 33%, vs. 1-1.5%. So basically if it wasn’t for e-commerce, this thing would be tanking.
Vivek Pandya: Yes. I think that’s one of our big takeaways is, it’s good that a lot of companies are at their maturity with online commerce that they’re at this whole year to keep momentum going when offline has been so severely impacted. That one to 1.5% number is an estimate from Deloitte because they’ve been able to take their estimates and we’ve seen similar estimates come from other analysts. And for a context like in 2019, overall retail growth was charted at 4.1%. So there’s still some analysts saying that it could pick up to that level. And I mean, if it can perform at last year’s level, all things considered that, I think, would be pretty good. But it’s considering what the challenges are, considering how people are like battening down the hatches a little bit as they get into these colder months. That’s an assumed estimate for the season and then it helps further contextualize our 33% figure.
Small Business Trends: Mobile is just driving the actual online sales. I mean, I was really shocked. I mean, I knew it was going to be big, but the increases are just ridiculous.
Vivek Pandya: That’s exactly our thought, Brent. We had assumed that with people being more at home, just being on our laptops more, that would push more of a shift to laptop commerce and maybe slow down the incremental increases we saw with smart phones. But we didn’t see that. It just kind of took off as you’d expect in terms of just how we’ve compartmentalized a lot of our activities. So we think about working a lot on laptops and productivity there. But then with shopping and some of these types of activities, maybe it’s a relic of when people don’t want people seeing them shop online when they’re in the office. And they’re just conditioned to just grab a phone and feel more adept and comfortable and just continuing to smartphone shopping.
But yeah, this for us is a real testament to a lot of the investments companies have made to make smartphone purchasing easier and more comfortable and straightforward. And it was the right call for them to make when we think about it, because it’s just certain activities consumers are just ready to pick up the smartphone for. And so it’s even more important than ever that those mobile experiences are just completely buttoned up and smooth for consumers.
Small Business Trends: Yeah. I think that’s the testament to creating a frictionless experience, making it very easy to buy on mobile. Versus I guess, busting out the laptop and doing, searching and clicking. And it is a much easier experience, so I guess that’s even when we’re sitting at home, we’re using these things to buy stuff. That was the one that really got me.
Let’s talk a little bit about, one that’s kind of near and dear to me, small guys versus the big guys. And I mean, it looks like there’s enough to go around here with the increases. But small guys are holding their own.
Vivek Pandya: That’s right. And when we think about the small retailers here that we profiled and larger ones, we’ve got a billion dollars or more for large retailers, ten to 50 million dollars for smaller retailers in terms of how we’re profiling. And it can’t be lost that larger retailers have these pretty hefty marketing budgets that can allow them to take on a lot of eyeballs and amass their share of the retail holiday spend. And we saw about 55% year over year growth that these larger retailers had. When we think about the smaller retailers here, that the growth is more incremental at about 8%. But that’s all to say, the small retailers shouldn’t abandon the season because they have been doing a good job of driving still a lot of volume on their side and making the holiday season a large component of their yearly annual revenues. So they’re able to even drive a more effective boost out of the holiday season. Where we compare this sort of baseline to what the increases they see during the whole holiday season. And they’re doing better than larger retailers in that case.
But it’s all to say that there’s a lot of opportunity there when we’re talking about big numbers of 189 billion. So it becomes really important for a small retailers to continue to make their sales, their promotions really effective during the season. And hold their own against the larger retailers who we just expect to be able to kind of scale up their volume share. And what’s also good news for some of the smaller players is that consumers are being more deliberate and very cognition that they want to shop at small retailers. And we see them doing more business and supporting small retailers on small business Saturday, relative to the rest of the day. So that’s very, I think, comforting that if you’re a small retailer and you’re still making inroads, that you can rely on certain consumers who will definitely be there to try to support your business.
Small Business Trends: Do you think smaller businesses have done enough of making a really easy frictionless mobile experience for their offerings?
Vivek Pandya: I think that there’s a lot of opportunity there because even for large retailers, I would say there’s the apps, there’s the mobile web experiences. There’s this synergy that happens across laptops and desktop. So there’s a lot of opportunity for retailers of all sizes to try to drive improvements and support it. I think with smaller retailers, they have more confined resources, so then they have to make that call of, do we spend more investing in driving up mobile specifically and more initiative around mobile? Or do we try to work more around conversion rates across any type of device? Or do we work more on branding? All that becomes a little more of a challenge for them.
But it’s all to say that they also are in a place where they’re utilizing enterprise grade tools and have an opportunity to try to even drive and pick up on some of these trends in terms of mobile. That even larger retailers might have a tougher time moving away from some of their legacy solutions and jumping right into. So I would say both sides retailers have different strengths and weaknesses in terms of being able to tap into mobile and drive it to the potential that we’re seeing that could come from it.
Small Business Trends: Some of the things that stood out here for me is new customer revenue, 65% year over year since April for small businesses versus 49%. So this is an opportunity for small businesses to bring on new customers directly in a way that may not have been possible because they have to use marketplaces in a lot of ways. This may be an opportunity for them to create direct relationships with new customers.
And then that also, when you think about manufacturers of some kind of product, you’re seeing more and more opportunity to go direct to consumer. And this is another way for them to not just be thinking of a transaction, “Oh, it’s a holiday season, we get a new transaction.” But this is actually an opportunity to build a new relationship that could extend way past the holiday season.
Vivek Pandya: That’s exactly right. The larger retailers have definitely made big gains during this time. But the smaller retailers have an opportunity, especially if they have certain items that have been moving much quicker than larger retailers. They have an opportunity to create these relationships with consumers and keep them as customers for long beyond 2020. So there’s that push and pull of being able to provide that experience that will make it comfortable for new users to be like, “Okay, this is a brand I can trust to get these products to me.”
And there’s also this cognizant understanding that larger retailers are going to also go off of these consumers and make sure that they stick with them and use the brand leverage that they developed as people have seen their names when they’ve been walking down the street. And try to say, “Okay, well maybe I’ll use them for online now as well.” So it’s been an opportunity for both of them. But for smaller retailers, it’s definitely a new area for them to open up versus think about pulling larger retailer consumers towards them, they can just open up and unlock this new customer.
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