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The company, which provides cloud-based services and an ecommerce platform for merchants, expects “a challenging season” for shoppers and retailers alike. And “we can’t say shoppers didn’t warn us,” Salesforce said. That’s because shoppers have been searching for savings and waiting to make big purchases, it said.

“After remaining largely resilient throughout four years of economic uncertainty, consumers are finally feeling the pinch,” Salesforce said in a statement. “From sustained inflation to supply chain woes, consumers worldwide have been through a lot.”

Nearly a third of global shoppers (32%) reported using alternative credit services like buy now, pay later (BNPL) more frequently this year, according to Salesforce research.

Salesforce defines the holiday season as Nov. 1 through Dec. 31. In North America, 76 of the Top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. In 2022, those 76 online retailers combined for more than $116.97 billion in web sales.

Here are Salesforce’s five predictions about the 2024 holiday shopping season.

1. Chinese shopping apps will take over

The first Salesforce holiday shopping prediction revolves around two factors: prices and China. The company said 63% of Western consumers plan to purchase from Chinese shopping apps during the 2024 holiday season. That includes merchants such as Aliexpress, Cider, Shein, Temu and TikTok. And it all comes down to price, Salesforce said.

Rob Garf, vice president and general manager of retail at Salesforce, said sales increases have been “almost purely because of price increases, not increase in products sold.”

Order volumes have been falling since 2022, Salesforce said, and shoppers want their purchases to feel worth it. Salesforce projects that these Chinese shopping apps will take 21% of sales outside China itself in the 2024 holiday season.

2. Middle-mile shipping puts strain on margins

The second Salesforce prediction is that brands and retailers will spend an extra $197 billion on middle- and last-mile expenses during the 2024 holiday shopping season. That would be a 97% increase over last year’s holiday season.

The company said attacks in the Red Sea from Yemen-based Houthi forces and rising crude oil prices are driving container costs up worldwide. A Houthi spokesperson stated in December that they would target “ships affiliated to Israel or transporting commodities to Israeli ports” and continue to do so if “food and medicine keep not accessing the Gaza Strip.”

Salesforce cited a Reuters report assessing that “any ceasefire agreement would lessen the tension in the Middle East.” To date, Israel and Hamas have not agreed on terms for a ceasefire that would end the current Israeli military campaign. Israel has pushed for a six-week ceasefire, whereas Hamas has pushed for a permanent ceasefire.

Moreover, the collapse of the Francis Scott Key Bridge in Baltimore has stalled delivery times and added expenses for retailers. But despite these challenges, Salesforce said, retailers shouldn’t push shipping expenses onto consumers.

More than half of shoppers say they are more likely to purchase online than in a store if delivery is free, according to Salesforce. This is also in line with Digital Commerce 360 research.

Garf said retailers are getting more stringent about returns, as well. That has also led to retailers pushing buy online, pick up in store (BOPIS).

3. Shoppers embrace AI to search for the perfect gift

Salesforce said that artificial intelligence (AI) influenced 17% of online purchases during the 2023 holiday shopping season. Predictive and generative AI contributed to $199 million in online sales during the 2023 holiday shopping season, it said.

This year, Salesforce anticipates that more consumers will leverage AI, whether they know it or not. Already, 53% of shoppers Salesforce surveyed said they are interested in using generative AI for discovering gift ideas.

As Google embeds generative AI into its search tool, Salesforce said, retailers will be able to transition from keyword searches to natural prompts for finding products on their websites. Salesforce said it predicts search will drive a conversion rate nearly 3x better compared to traffic not engaged with site search. It also predicts a 1.8% conversion rate across all geographies and verticals in the 2024 holiday shopping season.

Salesforce announced AI, Data Cloud and Commerce Cloud features at its Connections 2024 conference at McCormick Place in Chicago on May 22 and 23.

4. Black Friday becomes Cyber Friday

Among the Salesforce predictions is that ecommerce will capture 7% of in-store sales on Black Friday.

Nearly two-thirds of shoppers Salesforce surveyed said they’re waiting until the Cyber 5 period to make large holiday purchases.

“The big news is that Black Friday is going to be the biggest day for digital,” Salesforce said.

Survey respondents cited convenience, free delivery and the ability to search for the best prices as their top reasons for going online. Additionally, 72% of surveyed consumers told Salesforce they prefer to shop online during Black Friday.

5. Retailers tap loyal shoppers to avoid skyrocketing digital marketing costs

Digital marketing costs are becoming more expensive as the United States prepares for another presidential election and Chinese companies buy more advertising inventory, Salesforce said.

“This means that brands and retailers have to better engage their existing customer base amid this tug of war over digital advertising space,” it said.

As a result, Salesforce said, shoppers are doubling down on loyalty programs. 63% of shoppers are making more purchases from stores where they can earn and redeem loyalty points, Salesforce said.

Salesforce Shopping Index data indicates that the rate of repeat buyers increased 8% over the last two years. Furthermore, 46% of shoppers say earning and redeeming loyalty points is the second-highest factor, behind price, influencing where they buy, according to Salesforce data.

The final Salesforce holiday prediction is that loyal, repeat buyers will make 40% of purchases in the 2024 holiday season.

“This season will be competitive, intense, and no doubt all about pricing and discounting strategies,” Salesforce said. “It’s never been more important to rely on your customer data for guidance and insight into marketing campaigns — especially the holiday promotional calendar — that keep your loyal customers buying more and buying from you.”

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“It used to be body and fragrance, fragrance numero uno, then would come body, and then hair and then skin,” Scalamandre told Digital Commerce 360. “Now, skin is in the same place as hair and getting close to body.”

The COVID-19 pandemic “played a big part” in skin care’s growth as a segment, Scalamandre said. People were at home and not wearing makeup. As a result, the makeup category suffered during the pandemic, but the skin care segment grew.

“Now, a lot of people are going away from masks more toward daily moisturizers and new cleansers and eye creams, but the category is back to pre- if not bigger than pre-COVID era,” Scalamandre said.

Holiday 2023 sales growth strong for Beekman 1802

In Beekman 1802’s case, the retailer benefits from being both a body and skin care brand. Scalamandre said that whereas skin care product sales spike in Q1 and in August and September, body care products spike in Q4.

Known for its goat milk-based products, Beekman 1802’s holiday sales — from Nov. 1 through Dec. 31 — grew 22% year over year in 2023. For the entire fourth quarter, they grew 25% year over year.

“We had a very strong holiday season,” she said. “It was about understanding and being agile with the timing in terms of Black Friday, Cyber Monday.”

Black Friday marked Beekman 1802’s largest peak, Scalamandre said. She groups it with Cyber Monday — which “was big,” she said without revealing more — because both are part of the Cyber 5, or the five-day sales period starting on Thanksgiving. “The next peak was right before Christmas,” she added.

Building on 2023 ecommerce sales successes

Scalamandre said Beekman 1802 ecommerce sales grew 27% year over year in 2023. They grew 18% in 2022, she said.

And that growth starts with customer relationship management (CRM), she added.

“We do segmentation, and we personalize,” Scalamandre said. “We really understand the behavior and the patterns of our consumers. We’re careful. We know how to push the body care consumer and to get her to buy into skin care, and then the skin care consumer, how to get her to get a bigger share in body care. That’s been hugely successful for us.”

Beekman 1802 increased its number of new consumers 18% in 2023, she said, exceeding its goal of 15% growth. That helped drive sales of skin care products, whereas the retailer previously focused on selling body care products. And because the skin care prices are “a bit higher” than the body care’s, Beekman 1802’s average order value (AOV) has grown to about $80 from between $69 and $72, she added.

Beekman 1802 growth through Ulta

Scalamandre said Beekman 1802 is exclusive with Ulta for brick-and-mortar store sales.

“In terms of growth there, we are really honing their marketing tools,” Scalamandre said, citing that Ulta has more than 42 million members in its loyalty program.

Last year, Beekman 1802 sales through Ulta — which include those made in physical stores and through ecommerce — grew 62%, she added.

Sales at Ulta currently represent 25% of Beekman 1802’s business, according to Scalamandre. Ecommerce accounts for another 25%, and sales from television channels HSN and QVC comprise about 24%, she added.

“Then we have ‘other,’ which is Amazon and some independents,” Scalamandre said. “We have a really nice omnichannel business where none favors the other.”

Ulta Beauty is No. 46 in the Top 1000. The database features Digital Commerce 360’s rankings of the largest North American online retailers. Ulta is the fifth-largest Health & Beauty retailer in the Top 1000.

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Etsy is No. 20 in Digital Commerce 360’s Global Online Marketplaces Database, ranking the 100 largest such marketplaces by third-party gross merchandise value (GMV). Its musical instrument marketplace Reverb is No. 42 and used-clothing marketplace Depop is No. 51.

“Etsy.com is struggling to grow GMS this year because it is known for non-essential spending and specialized purchases,” said James Risley, research data manager and senior analyst at Digital Commerce 360. “Shoppers can turn toward mass-produced items instead of the custom items Etsy is known for, so it has reduced the GMS for the site. However, Etsy’s ownership of two used-goods markets — Reverb and Depop — let it capitalize on the trend for reusing items and the lower cost associated with those.”

Etsy revenue grows in Q4, full year

In Q4, Etsy consolidated revenue reached a record $842.2 million, which is 4.3% growth over Q4 2022. The marketplace attributed the growth primarily to an increase in its ads business and payments revenue. Etsy consolidated net revenue decreased 24% year over year, falling to $83.3 million.

“We dramatically improved experiences for buyers, making it easier to find what you’re looking for, better at highlighting the best stuff, using new signals and nudges to drive conversion rate, improving reviews and recommendations, and developing new category purchase pathways and experiences,” said CEO Josh Silverman on an earnings call with investors.

Etsy annual consolidated revenue increased to $2.75 billion. That’s 7.1% year-over-year growth from $2.57 billion in 2022. Meanwhile, Etsy consolidated GMS decreased to $13.16 billion in 2023. That’s a 1.2% decrease from $13.32 billion in 2022.

Etsy buyers and sellers

Across all units, Etsy sellers grew to more than 9 million in 2023, a 21% increase over 2022. Etsy active buyers across all units also grew, up 1.5% to 96.48 million. 7 million of those active sellers and 92 million of the active buyers were specifically on the Etsy marketplace. The 92 million active buyers on Etsy represent 3% year-over-year growth and a new all-time high. The marketplace also grew its male buyers 6%.

Etsy said it “reactivated a record nearly 10 million lapsed buyers” in 2023, which is up 13% from the prior year. Silverman said Etsy’s buyer base has grown on a year-over-year basis for the past four consecutive quarters. Buyers, on average, are still shopping more frequently and spending more on Etsy now than pre-pandemic, he added. Etsy has grown its marketplace buyers 40% since Q4 2019, said Rachel Glaser, chief financial officer.

‘Etsy is all-in on gifting’

Silverman said Etsy’s goal is to evolve the marketplace from being “one of the places you can go to find a gift to being the indispensable partner for all of your gifting missions.”

“Etsy is all-in on gifting,” he said.

The Etsy marketplace has launched Gift Mode. It allows gifters to enter details about the person they’re shopping for. The marketplace then uses artificial intelligence and machine learning to match the receiver with gifts from Etsy sellers. Within Gift Mode, Silverman said, Etsy has identified “more than 200 recipient personas, from rock climber, to the crossword genius, to the sandwich specialist.”

“We believe gifting is an ideal use case for Etsy,” he added. “We have an enormous conviction that this is a space we can and should own and, if done well, can lead to market share gains across our core categories.”

Etsy gets holiday boost

“The Etsy marketplace’s GMS accelerated during the holiday season,” Etsy said in a statement.

Etsy had its highest-ever Cyber 5 GMS in Q4, Silverman said. He said Etsy Cyber 5 (Thanksgiving through Cyber Monday) GMS grew 4% year over year, not specifying a dollar amount. Both Cyber Monday and Gifting Tuesday set new company records as well, he added. Part of that came from Etsy holding a sitewide 24-hour Cyber Monday promotion, which used “a small amount of Etsy marketing dollars” and “delivered solid incremental GMS and a strong ROI.”

“99% of purchases in the United States were delivered on or before the estimated delivery date this holiday season,” Etsy said in a statement. “In order to better enable last minute gifting missions and improve fulfillment experiences, we launched an estimated delivery date filter in search results and highlighted local delivery options to buyers.”

Subsidiaries’ results

Reverb’s full-year GMS hit $942.1 million in 2023. Depop GMS was $599.6 million. From Jan. 1, 2023, through its sale date of Aug. 10, Elo7 GMS was $42.1 million. Etsy had acquired Elo7 in July 2021.

For the fiscal fourth quarter ended Dec. 31, Etsy Inc. reported:

• Active buyers reached 96 million.
• Etsy gross merchandise sales, or GMS, decreased to $4 billion. That’s a 0.7% dip from the fourth quarter of fiscal 2022, when it was $4.03 billion.
• Etsy revenue grew to $842.3 million. That’s up 4.3% from $807.2 million in the year-ago period.

For the full fiscal year ended Dec. 31, Etsy Inc. reported:

• Etsy GMS decreased to $13.16 billion. That’s down 1.2% from $13.32 billion in fiscal 2022.
• Etsy revenue grew to $3.75 billion. That’s up 7.1% from $257 billion the year before.

Check back for more earnings reports. Here’s last quarter’s Etsy report.

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Nonstore sales, which are mainly online, increased by 7.0% year over year in December. That’s according to the advanced estimate in the December monthly retail sales report from the U.S. Commerce Department. Total retail sales, including both in-store and online, grew 3.1% year over year. Those figures are not adjusted for inflation or seasonality.

Nonstore sales also grew 8.4% in Q4 2023 and 8.0% for the whole year, down from 12.8% growth in 2022.

The ecommerce addressable portion of total retail sales, excluding restaurants, fuel, and automobiles, grew 3.9% in 2023, according to Digital Commerce 360’s analysis of Commerce Department data.

Online sales contribute to December spending

Nonstore sales grew again in December, although not as quickly as they did in November. In November and December combined, nonstore sales increased 8.2%. That was bolstered by a strong holiday season. U.S. online holiday spending reached $221.1 billion in 2023, according to Adobe Analytics. The majority of that spending happened in November, which included the Cyber 5 period. But the remaining $98.6 billion in U.S. online sales were recorded in December. Retailer sales that continued past Cyber Monday drove some of that December spending, Adobe says. Online spending for the holiday season, including November and December, grew 4.9% year over year, Adobe said.

“Retail sales were stronger than expected in December,” said Ted Rossman said, senior industry analyst at Bankrate, in a research note. “Bars and restaurants, health and personal care stores, electronics and appliance stores and motor vehicle and parts dealers all notched double-digit year-over-year gains,” he said. Gas stations, furniture stores, department stores, and building material stores were the only notable weak spots, he added.

Weak sales at furniture and home improvement stores have become the norm in recent quarters as consumers experience a weak housing market and postpone moving, hurting demand in the category.

The National Retail Federation responds

December results show a promising end to the year, according to the organization. 

“Consumer spending was remarkably resilient throughout 2023 and finished the year with a solid pace for the holiday season,” National Retail Federation (NRF) chief economist Jack Kleinhenz said in a statement. “Although inflation has been the biggest concern for households, the price of goods eased notably and was helped by a healthy labor market, underscoring a successful holiday season for retailers.”

The NRF also put out its own December sales estimate, the CNBC/NRF Retail Monitor using credit card data from Affinity. The report found that online and nonstore sales grew 31.17% year over year in December. It also found total retail sales grew 5.32% over the same period.

Other holiday spending in 2023

“Consumer spending was remarkably strong during the holidays, continuing a year-long trend,” Rossman said.

Total holiday results, from Nov. 1 to Dec. 31, largely mirrored December results. Electronics and appliances stores saw the largest gain, up 9.3% over both months compared to 2022. Health and personal care store sales also grew, up 9.0%. 

Those two categories, alongside nonstore sales, recorded the widest growth by far. The next category by growth was apparel stores, with sales up 3%.

The Commerce Department reports overall retail sales, including nonstore sales, every month. It reports retail ecommerce sales quarterly, with the fourth-quarter ecommerce report due out Feb. 20.

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The ecommerce software provider defined the holiday season as Nov. 1 through Dec. 31. Year over year, Salesforce said, global online sales grew 3%. Moreover, the global average discount rate across the entire holiday season was 21%. That’s the highest it has been since 2020, Salesforce said. Salesforce uses data from more than 1.5 billion global shoppers.

In North America, 76 of the top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. In 2022, those 76 online retailers combined for more than $116.97 billion in web sales.

Meanwhile, U.S. online holiday spending reached $221.1 billion, according to data from Adobe Analytics.

How much did global ecommerce sales grow during the 2023 holiday season?

By week, the largest sales growth during the holiday season was a tie between Cyber Week (the week encompassing Thanksgiving, Black Friday and Cyber Monday) and pre-Christmas, according to Salesforce data. Each of those weeks grew sales 6% year over year, Salesforce reported. The next-highest sales growth (4%) was in the first week of November. Christmas-week sales growth declined 4% year over year.

Based on Salesforce’s data, order growth was correlated with sales growth during the 2023 holiday season. Cyber Week and pre-Christmas week each recorded 6% year-over-year order volume growth in 2023. Meanwhile, order volume during the first week of the holiday season grew 2% year over year, Salesforce said. Christmas-week order volume declined 6%.

For the holiday season as a whole, order volume grew 2% year over year, Salesforce said. That correlated with 2% year-over-year growth in units per transaction growth, and the increase in average selling price was 0.7% year over year, Salesforce said.

How popular was store pickup in the 2023 holiday season?

Each week of the 2023 holiday season, at least 22% of orders were picked up at stores, Salesforce found — or more than one out of every five orders. That grew to at least a quarter of all orders from the week after Thanksgiving through Christmas week, according to Salesforce, with about a third of orders (33%) being picked up at stores during Christmas week.

Share of online orders picked up at store during the 2023 holiday season, according to Salesforce.

Mobile shopping trends during the 2023 holidays

Traffic to mobile devices grew year over year during each week of the holiday season, Salesforce said. The largest growth in mobile traffic, 10%, was during Cyber Week. The first week of the holiday season, post-Cyber Week, and the week before Christmas each recorded 9% growth in mobile traffic, according to Salesforce.

In contrast, desktop web traffic decreased each week of the holiday season, Salesforce found.

What channels drove the most online traffic through the holiday season?

Each week of the holiday season, direct traffic accounted for the largest source of online retailers’ global website visits. From Nov. 1 through the end of December, Salesforce data shows, direct traffic accounted for 37% of all visits to online retailers’ websites, with three exceptions. During and directly preceding Cyber Week, that traffic source bumped up slightly to 38%. On Christmas week, it dipped slightly to 36%.

Search traffic accounted for about a third of all website visits throughout the 2023 holiday season, Salesforce found, hovering between 31% and 33% each week. Internal traffic accounted for 14% to 15% of visits each week during that time frame, and traffic from social media platforms combined for 10% to 11% of total visits each week. Advertising and email traffic each accounted for just 1% of global visits to online retailers’ websites.

Global web traffic growth from social media platforms grew 10% year over year in the first week of the 2023 holiday season, tied with the mid-season week halfway between Cyber Week and Christmas. Such traffic from social media platforms was its lowest during the holiday season during Christmas week (4%).

Advertisement traffic growth increased the most in the mid-season week (27%) and the week before Christmas (23%). The week before Thanksgiving, advertising traffic growth decreased 4%, the only week with negative ad traffic growth during the season.

Email and direct traffic were the only other channels to have negative growth during the 2023 holiday season, according to Salesforce data. Email traffic growth decreased 2% the week before Christmas, with a larger drop (-16%) during Christmas week. Direct traffic growth also decreased year over year (2%) during Christmas week.

How did returns factor into the 2023 holiday season?

Salesforce data shows that returns during the 2023 holiday season were largely consistent with the 2022 season. The percentage of orders consumers returned each week was essentially flat, with the exception that they grew to 19% during Christmas week in 2023, compared with 16% in 2022. They also grew slightly in the second week of November 2023 (11%) compared with the same week in 2022 (10%).

Share of orders consumers returned during each week of the holiday season in 2023 and 2022, according to Salesforce data.

Returns dipped slightly to 10% during the first week of November 2023 from 11% in 2022, and to 4% during Cyber Week 2023 compared with 5% in 2022.

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These are the most important trends of the 2023 holiday season, according to Digital Commerce 360’s coverage.

1. Consumers spent despite inflation worries

Analysts spent much of 2023 warning about an economic slowdown. Consumers, meanwhile, were burdened with shrinking savings, resumed student loan payments, and inflation. Retailers shared similar concerns in quarterly earnings calls.

“The sharp deceleration in retail growth is due to stubborn inflation in many sectors, spiking interest rates, a year-over-year decline in COVID-era federal stimulus, and the ongoing rotation of consumer spending from goods to services,” president at retail research firm Consumer Growth Partners Craig Johnson said in a holiday forecast.

Despite these concerns, consumers spent anyway. According to Adobe Analytics, U.S. online holiday spending reached $221.8 billion. That’s in line with Adobe’s projection of $221.8 billion. Online holiday spending in the U.S. grew 4.9% over Adobe’s recorded $211.7 billion in 2022, setting a new ecommerce record. Growth was higher than the 3.5% year-over-year growth Adobe reported in 2022. Adobe classified November and December as the holiday season.

Fraud prevention vendor Signifyd says U.S. holiday sales increased 7% in 2023 over 2022. Signifyd classifies Oct. 1 through Dec. 31 as the holiday season. The security company previously predicted that sales would grow 5%.

Some consumers might have even spent money they didn’t have. Buy now, pay later services like Klarna, Affirm and Afterpay were used to finance more holiday spending than ever this year. That contributed $16.6 billion in online spending, an increase of 14% and $2.1 billion over the same period in 2022. U.S. consumers used BNPL for $9.2 billion in online purchases in November, up 17.5% year over year. Cyber Monday was the biggest BNPL day in history, accounting for $940 million in sales, up 42.5%.

2. The holiday season extended

Holiday shopping started earlier this year. Amazon’s Big Deal Days sale in October kicked the buying season off in earnest. Walmart held a competing Holiday Kickoff Sale at the same time, explicitly marketing the October event as part of the holiday season.

Other retailers felt the pressure to start marketing holiday promotions earlier, too. True Religion launched its holiday campaign in October, earlier than in previous years. The retailer studied consumer behavior and Google search trends, alongside information from consumer research firms like McKinsey and Deloitte.

Meble Furniture made a similar calculation, president Raf Michalowski said. The marketing firm that works with Meble advised the retailer to start the sale earlier.  

“Consumers only have so much money to spend, so you want to get in front of them or they spend it somewhere else,” he told Digital Commerce 360.

Sales and holiday-themed marketing events, such as Big Deal Days, pushed consumers to start shopping earlier in the season, says Kasi Socha, analyst at retail data research company Gartner. Consumers are trending toward shopping for holidays all year long, she says, and Gartner predicts 30% of consumers will shop for winter holiday gifts year-round by 2026.

A November poll from Digital Commerce 360 and Bizrate Insights bears that out. Nearly one-quarter (23.9%) of the 844 consumers surveyed said they started shopping for holiday gifts before September this year. Another 11.1% started in September, and 13.4% started in October. Just 21.9% of consumers waited until the Cyber 5 period or later to start holiday shopping.

3. Online shopping kept growing

2023 proved consumers aren’t willing to give up the convenience of online shopping, even if they feel safe going to stores. The U.S. Census Bureau, as well as the National Retail Federation (NRF) and CNBC’s Retail Monitor, reported that November online holiday spending outpaced in-store sales growth.

Online sales recorded the largest growth of any category measured by Retail Monitor, growing 26.27% year over year. Core retail sales, meanwhile, grew 4.7%. Retail Monitor’s data comes from credit and debit card purchases from consumer data vendor Affinity Solutions. 

The U.S. Census Bureau also reported online sales growth outpacing total retail in November. Nonstore sales, which encompass online sales, grew 10.6% over 2022. That’s significantly higher than total retail sales, which grew 4.1% over the same period. 

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The holiday season encompasses online spending between Nov. 1 and Dec. 31 across 1 trillion visits to U.S. retail sites, 100 million SKUs and 18 categories. 

The majority of online holiday shopping happened in November, boosted by a strong Cyber 5. U.S. consumers spent $123.5 billion online in November, a 6% year-over-year increase. $38.0 billion of that spending took place between Thanksgiving and Cyber Monday, growing 7.8% over 2022.

The other $98.6 billion in U.S. online sales were recorded in December. Retailer sales that continued on past Cyber Monday drove some of that December spending, Adobe says.

Holiday spending by category

65% of online holiday spending in 2023 was in just five of the 18 categories Adobe tracks.

Top categories by online holiday spending:

• Electronics ($50.8 billion)
• Apparel ($41.5 billion)
• Furniture ($27.3 billion)
• Groceries ($19.1 billion)
• Toys ($7.7 billion)

TVs, smart speakers, tablets, Bluetooth headphones, and smart watches ranked among the most popular online purchases during the holiday period. Pajamas, sneakers, and cold-weather items like sweatshirts dominated apparel sales. Popular furniture purchases included barstools, throw pillows and Christmas decor.  

Aside from the top categories, skin care serums and moisturizers, vacuums, and small kitchen appliances were also top sellers, Adobe says.

Categories with the highest sales also recorded some of the largest discounts. Electronics discounts peaked at 31% off listed prices, followed by toys (28%) and apparel (24%).

Buy now, pay later (BNPL) in holiday spending

BNPL was used as a payment method in more online sales than ever this year, according to Adobe. It contributed $16.6 billion in online spending, an increase of 14% and $2.1 billion over the same period in 2022. U.S. consumers used BNPL for $9.2 billion in online purchases in November, up 17.5% year over year. Cyber Monday was the biggest BNPL day in history, accounting for $940 million in sales, up 42.5%.

“In an uncertain demand environment, retailers leaned on discounting and flexible payment methods to entice shoppers this holiday season,” Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. “The strategy was effective, driving record spend online during big days like Cyber Monday and Black Friday, and a record 11 days that surpassed $4 billion in daily spend this season.”

The holiday season contributed to a huge year for BNPL use, accounting for $75 billion in online spending in 2023, up 14.3% from 2022.

Other holiday spending takeaways

Mobile shopping overtook desktop online sales for the first time in 2023. 51.1% of online sales across the holiday season were made via smartphones in 2023, up from 47% in 2022, Adobe says. Mobile sales peaked on Christmas Day at 65%, from 61% in 2022. Consumers made purchases on final holiday deals while spending time with friends and family, Adobe says.

Meanwhile, curbside pickup dipped slightly, though it still remains popular. It was used as a fulfillment method in 18.4% of online orders from retailers offering the option. That’s down from 21% in 2022. Usage peaked ahead of Christmas Eve on Dec. 22 and Dec. 23, accounting for 36.8% of orders during that time frame. Major retailers including Walmart and Target promoted their curbside capabilities through Christmas Eve.

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Some early numbers from the holiday auto sales period are already available. They indicate this season could bookend a year of improved sales, even if some results are mixed.

Projected 2023 auto sales

In 2023, total new car sales are projected to post a year-over-year increase of more than 10%. That would be the highest increase since 2019, according to Cox Automotive Inc. Cox operates Autotrader.com, an online marketplace for auto buyers and sellers. For used vehicles, about 35.9 million units are expected to be sold for the year. That would be fewer than the 36.3 million used autos sold in 2022, the company shared.

Online sales, meanwhile, have been on track to claim a larger share of the auto sales market. By 2025, online auto sales in the United States are expected to represent 18% of total auto sales, up from 9.7% in 2020, according to the consultancy Roland Berger LP.

Compared with 2022, early returns for the 2023 holiday shopping season indicate that online auto sales are on the rise. Cars.com reports that between Thanksgiving Day and Cyber Monday it saw a 6.4% week-over-week rise in new car searches. That was accompanied by a 4% increase in used car searches for the same period. Cars.com is operated by Cars Commerce, Inc. The provider of automotive marketplace technology claims to attract about 26 million visitors a month.

“Historically, we’ve seen an increase in engagement with automaker ad campaigns on Cars.com during sales events and a significant uptick in dealer leads, as in-market shoppers are motivated to find out more about deals on available vehicles,” says Rebecca Lindland, senior director of Industry Data and Insights for Cars Commerce. “Additionally, that uptick in searches on Cars.com points to active shoppers during the holiday season when many of these ad campaigns and sales events occur.”

Signals in used car sales

Sales of used cars also got off to a strong start in November. Cox Automotive says it saw a surge in auto sales on Autotrader.com beginning the Tuesday before Thanksgiving.

“Tuesday prior to Thanksgiving was one of our top five highest volume days for cars sold ever measured by sales contracts signed,” says Paulo da Silva, assistant vice president of operations for Cox Automotive Ecommerce. “On Black Friday we saw another top five highest volume day for cars sold ever.”

Cox Automotive also saw one of its three best days ever on Black Friday for funnel activity. “That strong funnel activity the week of Black Friday translated into November being the best month ever in terms of cars sold through our ecommerce platform,” da Silva adds.

The spike in volume on Autotrader.com heading into Thanksgiving and on Black Friday is a sign that consumers are making greater use of the online channel when purchasing a car, a Cox Automotive spokesperson adds.

Why it could be a December to remember

As the calendar flipped to December, early data indicates that consumers continue to spend on auto purchases. Interest can be seen in search activity. Cars.com saw that the first 11 days of the month were 5% busier than the first 11 days of November. That lift reflects typical seasonal buying patterns, Lindland says. One factor helping the surge in auto sales during December is that car companies are upping the ante when it comes to incentives. These are meant to encourage consumers to pull the trigger on purchasing an automobile, she adds.

Those boosted incentives have come as inflation led to higher prices and interest rates, including for auto loans, Lindland notes. “Some economic headwinds exist for consumers, but automakers are increasing incentives to entice shoppers with better finance terms and help offset high prices,” Lindland says.

With used car sales for 2023 projected to be slightly lower than in 2022, Lindland does not expect a year spike in the category. “December is a soft month for used vehicles as those would-be shoppers tend to allocate their wallet to holiday-related expenses, deferring vehicle purchases until they get their tax return.”

Expectations based on previous years

In average years, auto sales have risen in December relative to previous months, according to TrueCar.com. The digital marketplace connects buyers and sellers to a nationwide network of auto dealers. TrueCar.com says it does not have “mature data” yet for the 2023 holiday shopping season. Nevertheless, historical data confirms that trend. In December 2022, sales of new cars on the TrueCar.com platform accounted for 7.8% of sales for the month. That was up from 6.9% in November the same year.

“Monthly seasonal sales [in 2020 and 2021] were abnormal due to COVID/inventory shortages, but this year has been a little more stable, comparable to the 2015-2019 average,” says a Truecar.com spokesperson.

From 2015-2019 new car sales on the TrueCar.com platform averaged 9.2% for December, the company adds.

The uptick in sales during December coincides with an increase in incentive spending by automakers during the month. In 2022, automakers increased their incentive spending by 23.7 %, according to TrueCar.com data. The surge in incentive spending in 2022 followed a 4.6% decline in incentive spending in 2021. Incentive spending increased 4% in 2020 and 2019, respectively.

Are holiday promotions effective?

New car sales tend to be strong throughout December. Within the month, one of the most active periods for used cars is between Christmas and New Year’s Eve, according to Vroom.com. “It’s what many in the industry call the 13th month,” a Vroom.com spokesperson says. Vroom will not report sales for the fourth quarter of 2023 until early next year.

On the used car front, online used car retailer Carvana Co. does not traditionally see December promotions move the needle. “Where we see a real increase in sales is around tax season when consumers use their tax returns to purchase a car,” says a Carvana spokesperson.

Sales data from TrueCar.com supports that trend. In 2022, used car sales on the TrueCar.com platform accounted for 9.3% of sales in May. That was up from 9.1% in April. Used car sales as a percentage of sales dipped to 8.4% in June and 8.1% in July.

Challenging factors

While holiday auto sales look strong for 2023, the forecast for 2024 is that sales will slow slightly. That is due to high interest rates for auto loans, depleted inventory and fewer incentives from automakers, says Cox Automotive chief economist Jonathan Smoke.

“2023 has been strong and consistent for new vehicle sales and have been supported by improving supply levels and higher incentives,” Smoke said in Cox Automotive’s bi-weekly auto market report posted December 19. “But, for both the economy and auto sales, expect slow growth in the year ahead. One percent to two percent growth is about all we can expect, but it beats the alternative.”

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The post Signs holiday auto sales could have a December to remember appeared first on Digital Commerce 360.

That data excludes automotive sales. Mastercard SpendingPulse says it measures in-store and online retail sales across all forms of payment and is not adjusted for inflation.

“This holiday season, the consumer showed up, spending in a deliberate manner,” said Michelle Meyer, chief economist at the Mastercard Economics Institute. “The economic backdrop remains favorable with healthy job creation and easing inflation pressures, empowering consumers to seek the goods and experiences they value most.”

Did online holiday sales grow in 2023?

Online holiday sales in 2023 grew from Nov. 1 through Christmas Eve, Mastercard found, and so did in-store sales.

And to give more detail, online retail spending increased at a faster pace than in-store spending. In-store sales grew 2.2% year over year, according to Mastercard SpendingPulse. Yet online retail sales increased 6.3% year over year in the same period, taking “a considerably larger portion of total retail spending.”

“Retailers started promotions early this season, giving consumers time to hunt for the best deals and promotions,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “Ultimately it was about getting the most bang for your buck as consumers spent on a variety of goods and services, resurfacing spending trends from before the pandemic.”

Online holiday sales growth by category

Mastercard SpendingPulse broke out year-over-year data for key retail categories. It did not differentiate online and in-store sales growth and declines. Instead, it provided year-over-year changes in total sales for each category.

Among the five categories it broke out, restaurants grew the most, at 7.8%. Apparel grew 2.4%, closely followed by grocery at 2.1%.

That grocery sales growth extended to web sales as well. Online sales accounted for 11.7% of total weekly grocery spending in the last week of November, according to data from the monthly Brick Meets Click and Mercatus Grocery Shopping Survey. United States online grocery sales reached $8.1 billion in November. That’s 5.2% growth over November 2022’s online grocery sales, which reached $7.7 billion.

Conversely, Mastercard found, electronics sales decreased 0.4% year over year, and jewelry sales decreased 2.0%.

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