COVID-19 drives e-commerce growth
Adobe is launching the first real-time barometer of the digital economy. For this index, Adobe analyzes trillions of online transactions involving over 100 million items across 18 product categories. The first Adobe Digital Economy Index shows that the digital economy is growing faster than the overall economy and has never been more important than during the COVID-19 pandemic.
Over the past six years, digital purchasing power has increased by around one percent. This is shown by the first Adobe Digital Economy Index. This analyzes data from the USA.
The reason for this is obvious: in times of crisis, when most people have to stay at home, consumers and companies are increasingly turning to digital solutions. In view of this unchecked momentum, it is all the more important to closely monitor online prices and spending, understand the trends in the digital economy and predict changes in the various sectors and countries as accurately as possible.
Based on Adobe Analytics and a "digital shopping basket" that measures sales of online goods and services, the Adobe Digital Economy Index shows a 20% increase in digital purchasing power since 2014. Sales in certain categories, including groceries, cold medicines and fitness equipment, have risen sharply as a result of COVID-19. Click & collect online shopping has increased by 62 percent.
Other key findings of the latest Adobe Digital Economy Index include:
Digital is driving the new shopping behavior: Some product categories have taken up a larger share of the digital shopping basket, while others have fallen behind. The "food" product category in particular has increased its share of the shopping basket from 6% to 8% over the past three years. Clothing retailers were early adopters of digitalization and have increased their share of total online transactions from 21% to 23% in the last five years. In contrast, the share of desktop PCs has fallen from 21% to 8% as a result of the mobile boom.
Digital purchasing power continues to increase: Consumers are getting more for the money they spend online. Digital purchasing power has risen by 3% compared to the previous year and has increased by 20% since 2014. This means that today consumers can buy for 1.00 dollar what would have cost 1.20 dollars in 2014. In the same period, a dollar spent on offline purchases of similar goods has lost value. Offline today costs 1.00 dollar, which would have cost only 88 cents in 2014. However, it is to be expected that more and more people will be online, that the offline and online economies will continue to converge and that prices will therefore also converge.
COVID-19 is driving growth in e-commerce: Between January 1, 2020 and March 11, 2020, purchases of several products saw a significant jump in sales: 807 percent for hand sanitizers, gloves, masks and antibacterial sprays; 217 percent for over-the-counter medication purchases (cold, flu and pain relievers); 231 percent for toilet paper; 87 percent for canned goods and shelf-stable items. At the beginning of March, orders for fitness equipment such as kettlebells, dumbbells, spinning bikes and treadmills also increased by 55 percent. The online grocery category saw an overall 100 percent increase in daily online sales between March 13 and 15. Online click & collect purchases increased by 62% between February 24 and March 21 compared to 2019.
Innovation drives down online prices: In the categories with the most product updates per year (electronics, computers, televisions), online prices have fallen and digital purchasing power has increased. Online prices for electronics, for example, have fallen by over 40% in five years. From January 2014 to July 2017, online deflation drove digital purchasing power up by an average of 3.9% per year. It was only when consumers started to buy more non-innovation goods and services - such as food and furniture - that online deflation and digital purchasing power slowed to 2% growth. As almost all product categories and not just innovative goods are purchased online, the price advantage of online shopping will decrease.
New digital shopping cart
The total share of online purchases in the US includes the categories of clothing (23 percent), electronics (16 percent), home and garden (12 percent), computers (8 percent), food (8 percent), home improvement items (5 percent), household appliances (4 percent), personal care products (4 percent), flowers and related gifts (3 percent), office supplies (3 percent), sporting goods (2 percent), books (2 percent), jewelry (2 percent), furniture and bedding (2 percent), pet supplies and products (2 percent) and toys and games (2 percent). The categories "Non-prescription medicines" and "Medical equipment and accessories" each account for 1 percent.
The Adobe Digital Economy Index is based on the analysis of over one trillion website visits and over 100 million articles. Adobe Analytics measures the transactions of 80 of the top 100 US online retailers. Based on this amount of real-time consumer transaction data, the Adobe Digital Economy Index provides much more accurate insights than ratings based purely on surveys. Several government agencies and industry associations, including the US Bureau of Labor Statistics, the Federal Reserve and the US Census Bureau, have agreed to work with Adobe to gain immediate insight into the digital economy and access to the data.
