Introducing Adobe’s Digital Dollar

Featured in Research
Research 05-02-2018

Each holiday season for the better part of a decade, Adobe has shared the most comprehensive and accurate retail insights based on consumers’ online behavior. Today, Adobe is bringing those insights beyond the winter with the Digital Dollar, a new quarterly report that shares year-round real-time online consumer spending leveraging Adobe Analytics. In addition to retail spending, the Digital Dollar also includes an evolution of the Digital Price Index debuted in 2014, that looks at online inflation and deflation.

For the inaugural Digital Dollar, the team took a deep dive into how Q1 holidays impacted spending patterns and took a look ahead at key days in Q2. And they tracked the rapid rise in smart products, along with the growing value of online shopping visits by smartphone.

E-Commerce is growing; retailers need to focus attention on holiday spending

Data from the first quarter of the year shows that e-commerce is still growing rapidly — online consumer spending in the U.S. between January and March topped $100 billion for the first time, which was a 14.1 percent leap year-over-year (YoY).

“This continued fast-paced growth in online spending suggests that consumer confidence remains high, and we suspect the strong stock market is also helping buoy online sales,” said Sid Kulkarni, manager for Adobe Digital Insights. “Based on our research, we predict the growth to pick up the pace in the coming months. We’re forecasting 14.4 percent year-over-year growth for Q2.”

A close look at President’s Day and Martin Luther King, Jr. Day shows that more online consumers are timing their spending to take advantage of holiday sales. The share of online dollars spent in Q1 has been shifting to these two holidays, making them relatively more important (1.3 percent of all quarter revenue for MLK, Jr. Day and 1.5 percent for President’s Day). For President’s Day, the Adobe’s data shows a lull in purchases just before and just after the big day as consumers target their dollars for the day. Key savings in January as a result of MLK, Jr. Day consumers saved, on average, 0.6 percent on televisions and 0.5 percent on medical equipment and supplies. In February, President’s Day discounts led to average discounts in the month of 5.5 percent on tablets, 2.5 percent on televisions, and 1.6 percent on both appliances and toys.

“We’re seeing a slowdown in spending in the days just before a key shopping holiday, and then a boost when the sales begin—the pattern suggests that increasingly savvy online consumers are waiting to compare retailers’ deals, and then spending big when the prices dip,” said Sid. “While these smaller holidays aren’t about to compete with November and December spending, they’re a big opportunity for retailers to make a splash, and build customer loyalty in the months leading up to major year-end spending. We think Memorial Day this year is going to be an especially huge opportunity for retailers to grab consumers’ attention.”

Memorial Day is one of the fastest growing holidays in the U.S. when it comes to online spending, and the Digital Dollar predicts it will be the highest revenue day in Q2, leaping 19 percent over 2017 spending levels. But even with Memorial Day’s rise and consumers’ increasing focus on holiday sales, the unofficial start of summer is likely to fall short of the $2 billion mark. So far, that barrier has only ever been broken during the end-of-the-year holidays in 2017.

A rise in smart products and an increase in the value of each smartphone visit

The first Digital Dollar also took a close look at the continued growth of smart devices. The data shows that the share of smart (app- or Wi-Fi-enabled) televisions has been increasing since 2015. In Q1 of 2018, nearly nine out of every 10 televisions sold online offered smart capabilities. The sale of high-resolution TVs is also up—4K surpassed 1080p in 2015 and continues to hold its strong lead over lower-res options.

“We think 4K’s rise to the top is powered by the cord cutters. As streaming services film more shows in 4K, and as consumers shift to streaming instead of cable, people are looking for high resolution,” said Taylor Schreiner, director, Adobe Digital Insights. “Consumers are also buying larger TVs, and resolution really matters as screens get bigger.”

Smart watches and speakers are also edging up on their traditional counterparts. The share of smart watches compared to conventional watches has more than doubled in the last five years (up to 21.5 percent of all watches sold online in Q1 of 2018), and the share of smart speakers surpassed conventional speakers in 2017 to hit 58 percent in Q1 of this year.

Consumers aren’t just demanding more smart products, they’re coming to rely on them more for their online shopping. While visits to online retailers via smartphone have begun to plateau, with 43.6 percent of visits coming from the devices (47.0 percent come from desktops and just 9.4 percent from tablets), the value of those visits continues to grow. At the beginning of 2014, the average amount a consumer spent during a smartphone retail visit was about one-fifth that of a desktop visit; it’s now up to one-third.

“While smartphone visits to retailers are stabilizing, we don’t think we’ve reached our final equilibrium yet — the data suggests that smartphone shopping will eventually overtake desktop visits,” says Taylor. “The main takeaway for retailers is that, while visits from smartphones are increasing slowly, consumers are quickly becoming more comfortable making significant purchases with their phones. This means there’s a real opportunity to win over customers through great mobile experiences.”

Online prices are falling faster than offline prices

The Digital Price Index, where Adobe has been tracking the shifts of inflation and deflation online since 2014, shows that deflation is happening more quickly for online products than for products on store shelves. In that time, annual inflation online (measured by the DPI) has been 1.3 percent lower than offline (measured by the CPI).

“We’re getting consistent data to show that prices continue to decline more quickly online,” says Taylor. “We think there are two major factors driving the trend. One, it’s easier and quicker for retailers to adjust their online offerings. Two, we know that consumers take the time to compare products online, so online retailers must react quickly to fierce price competition. The result is a growing divide between the online and offline economies.”

Behind the numbers for Adobe’s Digital Dollar and DPI

Adobe leverages Adobe Sensei, Adobe’s artificial intelligence and machine learning framework, to identify retail insights from trillions of data points that flow through Adobe Analytics, part of Adobe Analytics Cloud in Adobe Experience Cloud. Adobe’s Digital Dollar, the most comprehensive set of insights and predictions of its kind in the industry, is based on an analysis of one trillion visits to over 4,500 retail sites and 55 million SKUs. Adobe Analytics measures online transactions at 80 of the largest 100 U.S. web retailers, based on Internet Retailer’s 2017 Top 500 eGuide, an independent source that measures online commerce technologies.

You can find more data from the very first Digital Dollar report here.

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