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Fortune
Fortune
Sheryl Estrada

Retailers should embrace ‘mobile-first perspective’ after online holiday shopping tops $222 billion, Adobe analyst says

(Credit: Getty Images)

Good morning.

Holiday shopping on mobile devices has for the first time exceeded desktop-based e-commerce, including nearly two-thirds of what was purchased on Christmas Day.

New data from Adobe Analytics shows that 51.1% of online sales from Nov. 1 through Dec. 31—and 63% of web-based purchases on Dec. 25—came via mobile devices, a 4.9% year-over-year increase that helped produce a record haul of $222.1 billion.

And that’s without online purchasing reaching pre-pandemic holiday levels of 8% to 12% growth, Vivek Pandya, the lead analyst at Adobe Digital Insights, told me. “But it is an acceleration of the holiday season growth in 2022, which was around 3%,” he added.

Adobe's analysis included data from over 1 trillion visits to U.S. retail sites covering 100 million SKUs and 18 product categories.

“Retailers really have to be thinking from a mobile-first perspective,” said Pandya, adding that although many companies used to work incrementally on enticing consumers to make purchases via mobile devices, rather than only from desktop or laptop computers, time is of the essence.

“It's paramount for online retailers to focus on improving the conversion rate on websites and mobile apps to make sure that they’re not leaving any money on the table,” Pandya said. 

Cost effective

In building a direct relationship with consumers, CFOs are paying attention to modern metrics like customer lifetime value, which is measured in relation to customer acquisition cost. Ideally, you should spend less to acquire customers than you make back from them in long-term profits.

Mobile apps, Pandya told me, not only create more buying opportunities—they cut costs for retailers.

“They can engage that consumer on multiple occasions, but without having to pay for display advertising, for example,” he added. And looking past the holiday season, increased engagement via apps also has lasting benefits, whether "it's the Super Bowl, to sell televisions, or Valentine's Day."

“We do see retailers incentivizing the consumer to download their mobile app, maybe giving them even stronger discounts, like free shipping, or loyalty points,” Pandya said.

Incorporating AI chatbots on apps could further boost sales. Generative AI, Pandya told me, could eventually become “a copilot for consumers in online shopping journeys, and helping on multiple fronts," even with something as simple as groceries.

"You could just have it really become comfortable with your grocery list, and then just say, 'Put in my grocery order for me,'" he explained. "Retailers having generative AI support their processes will really enhance productivity and engagement."

Now and later

In addition to major discounts seen across categories including apparel, toys, and electronics, “Buy Now, Pay Later,” or BNPL, spending also rose this holiday season, according to Adobe.

BNPL usage hit an all-time high, rising 14% year over year to account for $16.6 billion in online sales, an increase of some $2.1 billion.

Many shoppers, Pandya said, were "looking at the interest-free element of BNPL, and they're saying, 'I'm gonna lean on this as a way of financing these products that I want to buy.'" And even if the Federal Reserve cuts rates later in 2024, it won't immediately affect most consumers, and "from that perspective, we still expect BNPL utilization to remain fairly elevated."

Sheryl Estrada
sheryl.estrada@fortune.com

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