Retailers Realize Record-Breaking Q1 For U.S. Online Sales
Retailers raked in over $100 billion in online sales from the United States in the first quarter of 2018, up 14.1% year over year, according to new analysis by Adobe Digital Insights (ADI). This marks the first time that online retail sales have surpassed $100 billion in Q1.
Retailers raked in over $100 billion in online sales from the United States in the first quarter of 2018, up 14.1% year over year, according to new analysis by Adobe Digital Insights (ADI). This marks the first time that online retail sales have surpassed $100 billion in Q1.
“That’s pretty remarkable because this is coming on the heels of 14.7% growth in the holiday season, which is pretty close,” said Siddharth Kulkarni, an analyst at ADI. “And it’s just a couple of years since we had our first $100 billion holiday season. So now we’re seeing that same number pop up in other quarters, which I think is a testament to how fast online growth is happening.”
ADI predicts that Memorial Day will be the highest-grossing day of Q2, but it will have to wait another year to break the $2 billion threshold surpassed only during the holiday season. Memorial Day online sales are expected to grow at about 19% YoY.
According to Kulkarni, online shopping, in general, is starting to concentrate more around holidays.
“The two main holidays that we saw in Q1 were Martin Luther King Jr. Day and Presidents Day, and they both surpassed $1.5 billion, which is a respectable amount,” explained ADI analyst Costa Lasiy. “It’s nowhere near the $6 billion figure of Cyber Monday, but these two holidays were the highest two peaks in Q1.”
The move toward holiday-oriented buying is driven primarily by retailers tending to offer deals and discounts at those times, Lasiy said.
Device Visits
As for where retail visits are coming from, smartphone growth, for years on an overall upward trajectory, is beginning to flatten, ADI found.
“Consumers are starting to reach that equilibrium between when they want to use the desktop and the smartphone,” Lasiy said. “So while we still expect smartphones to pass desktops in terms of online visits to retailers in the next couple of months, the pace is starting to reach this plateau. We don’t expect smartphones to continue to grow and shoot all the way up to 90% to 100% and take up all the visit shares.”
That said, smartphone revenue-per-visit is growing fast, though it has a long way to go before it catches up to the desktop, where the vast majority of dollars are spent, ADI found.
According to Kulkarni, visitors shop differently online during the week than they do on the weekend. “People’s home desktop and work desktop are very different devices,” he said. “We found that people make bigger purchases on weekdays, especially on desktop.”
The Move To Smart Technology
As part of its analysis, ADI also looked at the uptake of smart technology, which was among the most popular online purchases in Q1. One key finding is that smart TVs comprised nine out of every 10 TVs sold during those three months. (For the purpose of this report, smart TVs are defined as a television that is Wi-Fi enabled or have Chromecast, Roku, or similar services built in.)
“We’ve seen really strong growth from 2015 to 2016, and then from the last year-and-a-half we’ve seen smart TVs just about reach full maturity,” said ADI analyst Juliet Fletcher. “At this point it’s just standard to assume that consumers are going to spend those extra dollars and go for the smart TV.”
ADI also found that 4K TVs, which surpassed 1080p in early 2016, are now consumers’ preferred choice, while 1080p is declining. Additionally, 50% of purchased TVs in Q1 2018 were between 46 inches and 85 inches in size, indicating that consumers are willing to splurge for a better viewing experience.
Meantime, smart watches now make up 21% of all watches sold online, ADI found. Sales of smart speakers have increased as well, 50% of which has smart technology like voice built in.
But just because consumers can connect seemingly every aspect of their lives to the Internet doesn’t mean that’s exactly what’s happening, Fletcher pointed out. Smart technology-enabled refrigerators, for example, drive less than 10% of revenue. Similarly, sales of smart light bulbs have shown very little growth in the past five years.
“Consumers pay for experiences, not products, and these devices have far to go in demonstrating the added value of smart technology to consumers,” Fletcher said.
View the full report below or click here to view it on SlideShare.