5 e-commerce trends for 2021: What we learned from the 2020 holiday season

The 2020 holiday shopping season (November through December) was one for the record books when it comes to its share of online spend in the U.S.

Analysis by Adobe Digital Insights (ADI), which uses Adobe Analytics to analyze trillions of online engagements to 80 of the top 100 retailers in the U.S., has found that COVID-19 had a tremendous impact on how people shopped online in 2020. E-commerce sales for the last holiday season saw two years’ worth of growth, reaching $188.2 billion, up a whopping 32 percent year over year (YoY).

“In light of the pandemic, digital became the primary way for people to connect, work, be entertained and shop, helping set online spending records for the holiday season,” says Taylor Schreiner, director of Adobe Digital Insights. “With online shopping already heightened coming into the season due to early discounting and improved mobile shopping experience, we saw revenue levels increase over Thanksgiving week and give way for record-breaking Black Friday and Cyber Monday. Now, as COVID-19 cases continue to rise and more stringent lock-down measures return, online spending is expected to stay elevated, at least for the early part of 2021.”

Below are the trends that bubbled up over the holiday season, which can help guide your online engagement and e-commerce strategy in 2021.

Online shopping is now the norm

For the first time, the online spend every day during the two-month holiday shopping period, including Christmas Eve, exceeded $1 billion. Additionally, with Cyber Monday surpassing $10 billion, the average online spend per day eclipsed $3 billion for the first time.

According to ADI, both early discounting in the season and late sales reduced the impact of Cyber Week (the five-day period starting Thanksgiving and ending Cyber Monday), which saw a growth of just 21 percent compared to the 32 percent for the overall season. November 2020, which included Cyber Monday, reached the $100 billion level – the first time a single month has hit that high.

Finally, Christmas Day, which is typically the biggest mobile shopping day, accounted for 52 percent of the revenue coming from smartphones, surpassing the halfway point for the first time.

“The pandemic made consumers more willing to convert online visits to actual transactions during the holiday season,” Schreiner says. “The change in consumer behavior led to not only more visits but an increase in the value of those visits.” Indeed, revenue per visit increased 10 percent YoY during holiday season. Even smartphones, which typically have the lowest conversion, saw a 15 percent increase year over year.

Contactless shopping trended during the holidays

Since the beginning of the pandemic, consumers shifted their buying habits to take advantage of buy online pick-up in store (BOPIS) options. At the onset of the pandemic, BOPIS increased from 15 percent of orders to 25 percent, a 65 percent share increase. Over the course of the 2020 holiday season, BOPIS continued to make up one in four orders (25 percent), an increase of 40 percent over 2019 holiday levels (about 18 percent).

“As expected, BOPIS usage peaked for last-minute shopping when standard or even expedited shipping wouldn’t get gifts delivered on time,” Schreiner says.

Also of note: The peak day for BOPIS usage was December 23, two days before Christmas, in both 2019 and in 2020.

Free shipping was slightly less prevalent this year and the cost to ship went up

Based on Adobe’s Magento data, consumers took advantage of free shipping, especially during Cyber Week, with a whopping 57 percent of the season’s orders through Dec 13th qualifying for free shipping. This number reached 64 percent during Cyber Week (up 12 percent).

“For orders that didn’t qualify for free shipping, it was more expensive to ship during Cyber Week this year than last year, due to the stress COVID-19 placed on shipping infrastructure,” Schreiner explains.

The cost to ship (when charged) increased 12 percent YoY from $10.51 to $12.21. And the minimum observed order also increased from $20.16 to $22.86. Orders shipped for free during Cyber Week dropped from 70 percent to 64 percent in 2020.

Search engines drove a big portion of retailer’s site traffic and revenue

Search accounted for 45 percent of both visits and revenue during the holiday season. Paid search traffic was slightly more effective in generating revenue than organic search. Paid search had a higher share of revenue (25 percent) than visits (23 percent), while organic was less effective, representing 20 percent of revenue share and a 22 percent visit share.

Second to search is direct traffic which is often associated with brand strength and loyalty. Beyond that, affiliate and partner referrals remained strong revenue producers, making up 6 percent of traffic, and 14 percent of revenue. Social networks and display ads, which are often considered awareness generators, accounted for less than 5 percent of revenue combined and only one in 10 visits.

Overall, the drivers of online revenue boost were quite varied, according to ADI. More visitors and better conversion drove the lift in sales, while average order value remained flat YoY.

David vs. Goliath: Distinct trends for small retailers vs. big ones

Small retailers ($10 million to $50 million in annual revenue) had seen a larger boost in online sales at the beginning of the pandemic. But that advantage dissipated during the holiday season as large retailers ($1 billion in revenue per year) dominated the holiday shopping season.

However, ADI found that the boost difference for the holiday season this year, at 110 percent for large retailers vs. 104 percent for small, was much closer than it was last year, at 107 percent for large and 84 percent for small. The Cyber Week boost difference remains most pronounced on Thanksgiving, with large retailers having 50 percent more of a boost on that day compared to small retailers, indicating their focus on leveraging Thanksgiving as a shopping day with deals.

During Cyber Week, large retailers drove sales earlier, while smaller ones did so later in the week. Small businesses had a slight boost advantage on both Small Business Saturday and Cyber Monday. Additionally, large retailers were 44 percent more effective at generating revenue per time spent shopping, at $1.20 per minute for large vs. $0.83 per minute for small retailers.

Some metrics that were similar between small and large retailers include order value: Consumers placed the same size orders with small retailers as they did at large ones, $163 vs. $167, respectively. Additionally, the use of smartphones to shop was similar no matter the size of the store: 63 percent of visits to small retailers and 64 percent of visits to large retailers came from smartphones.

That said, large retailers have a slight advantage in order initiation and a significantly larger advantage in cart completion. Whether it is comparison shopping, a level of confidence or other issue, large retailers have a much higher final conversion rate – 5.1 percent vs. 3 percent – compared to smaller retailers.

“We’ll see a continued focus on online shopping throughout 2021, as there is still a lot of uncertainty around how much longer COVID-19 will limit in-store engagement,” Schreiner said. “Engaging and converting online shoppers into buyers is key to retailers’ success, and personalization to stand out among the masses has never been more important – the habits that consumers are building now will persist, at least in part, even beyond COVID-19.”