Online Retail Gets More Expensive, Weak Discounts for Holidays: Adobe Survey

By Naveen Athrappully
Naveen Athrappully
Naveen Athrappully
November 20, 2021 Updated: November 21, 2021

E-commerce has gotten more expensive due to the inflationary environment, according to a recent report from Adobe, a significant warning ahead of the holiday season when retailers normally push big-discount deals.

Online prices rose 1.9 percent in October from a year earlier and 0.9 percent from the previous month, based on data from Adobe Inc. The latest numbers mark the 17th straight month of price increases after six years of declines in the Adobe Digital Price Index.

“Consumers are now seeing a double hit to their pocketbooks, with everyday expenses like rent and gas rising, while the big holiday shopping season is going to get more expensive,” Adobe Digital Insights lead analyst Vivek Pandya said in the report.

Although prices remain high, Adobe expects e-commerce to account for at least 25 percent of overall holiday sales. Shoppers headed to the market early by almost a month this year, mainly because of supply chain constraints that many are concerned might lead to products being out of stock. In October, shoppers received more than 2 billion out-of-stock messages online.

Consumers spent more than $72 billion last month, 8 percent more than in the year-earlier period, according to data from the software company. Despite high prices, online shopping remains the cheaper option as offline retailers push up prices to record highs based on the latest Consumer Price Index (CPI), which rose by 6.2 percent in October from a year earlier.

When looking at individual categories, discount levels for electronics are at 8.7 percent compared to last year’s 13.2 percent. Sporting goods prices are down by 2.8 percent (11.2 percent in 2020). Appliances are offered at a discount of 4.6 percent (10.2 percent).

Computers and toys fare much better, with 12.4 and 15.9 discounts (compared to 11.9 and 7.5 percent discounts at the same time last year). However, home improvement and tools went up in price by 1.2 percent. In 2020, they were offered at a 6.8 percent discount.

“After 17 consecutive months of online inflation, we are entering a new normal in the digital economy. As e-commerce takes on a greater share of overall retail, the pricing trends have become a more important indicator of net impact to consumers,” Pandya said.

Almost 1 trillion retail site visits and over 100 million products were analyzed by Adobe. Altogether, the Adobe Digital Price Index tracks 18 product categories, out of which only books were reduced in price when indexed to a historical average (2015 to 2019).

The cost of purchasing electronic goods was down by 0.6 percent from October 2020, but the category is typically down 9.06 percent on average each year from 2015 to 2019.

Due to overseas manufacturing disruptions and supply chain issues, apparel prices have gone up 9.81 percent year-over-year in October. Toys were down by 2.71 percent, but less than the historical average discount of 5.54 percent each year. Deals have gotten smaller and weaker, with the trend likely to persist.