Adobe Digital Economy Index: Flight bookings pick up, e-commerce surges in the U.S. and globally
The key takeaways of the latest Adobe Digital Economy Index examine the impact on travel and eCommerce trends.
Image source: Adobe Stock / Tierney.
When 100 million vaccines were administered in the Unites States and a round of stimulus checks were delivered, Americans’ online spending habits began to shift once again. That’s the key takeaway of the latest Adobe Digital Economy Index, which examines the impact on travel and e-commerce trends.
The report measures transactions of seven of the top 10 U.S. airlines, eight of the top 10 U.S. hotels, and 1 trillion visits to retail sites, including more than 100 million SKUs in 18 product categories. For the first time, Adobe is also providing a global view of e-commerce based on direct transaction data in over 80 countries across 3 regions (Americas, APAC, EMEA) — more than any other technology company or research firm.
The findings paint a picture of growing consumer confidence and interest in travel, as more Americans get vaccinated. At the same time, it cements the notion that we are living in a digital economy — and that there’s no going back — as e-commerce sales are up substantially.
Travel bookings on the rise
In March 2021, flight bookings saw a significant jump, growing 111 percent compared to the weeks leading up to the vaccine rollout (11/30-12/13/2020), and hotel bookings grew 50 percent in the same time period. Travel also picked up significantly compared to the first two months of the new year with flight bookings in March 2021 growing 57 percent over February and 79 percent over January. Meanwhile hotel bookings grew 41 percent over February and 54 percent over January.
While these numbers are indicative of a resurgence in travel, it’s important to note that flight bookings are still down 22 percent and hotels are down 18 percent since this same period pre-pandemic (in 2019).
Giving consumers a bit of a push to book travel, domestic flight prices were down 16 percent in March 2021. Consumers, more optimistic about future plans, are taking advantage. Christmas 2021 flight bookings are up 17 percent and Thanksgiving flight bookings are up 9 percent compared to March 2019 levels. Future bookings (for travel between 10/20/21 and 12/31/21) have also seen a strong increase and are back to March 2019 levels. For more immediate travel, consumers are now booking flights further out at 26 days (seen starting March 4, 2021). This is up from 20 days in July 2020, when travel happened more out of necessity.
Adobe is also seeing regional differences, with consumers in the northeast more hesitant to travel. Bookings in March originating from the northeast are at 56 percent of pre-pandemic levels in Jan 2020 (West 63 percent — South 70 percent — Midwest 75 percent). However, the northeast sees a 3.2 percent increase in flight bookings for every 1 percent increase in vaccinations, the highest of any region.
During the early days of the pandemic, two industries diverged. Consumers held back travel spend and focused instead on physical goods that they could acquire through e-commerce. Come February of the new year, travel is now catching up. The gap in growth rates has reduced to just 37 percent, compared to 99 percent in January 2021.
U.S. e-commerce sales surge in March
e-commerce broke records in March 2021, with Black Friday-levels of online spend. Beginning March 11, when the American Rescue Plan was signed into law, e-commerce began to surge. An extra $8 billion was spent in the 3-week period from Mar 11–Mar 31 (for comparison, Black Friday 2020 drove $9 billion in e-commerce).
The $8 billion bump represents roughly 2 percent of the $410 billion in direct stimulus checks that went to consumers. Toys, furniture and bedding, video games and auto parts were top categories where consumers spent money. U.S. consumers spent $78 billion online for the full month of March, growing 49 percent YoY (the highest since July 2020).
Even as stores reopened and consumers felt more comfortable visiting them, online shopping has shown no signs of slowing down. In a survey of over 1,000 U.S. consumers, 32 percent feel more comfortable visiting stores in-person than they did in 2020, while only 23 percent report feeling less comfortable doing so. The surge online and rebound in March indicates that consumers are even more accustomed to ordering goods via their laptops or smartphones.
While consumers are spending more of their money, many are also exploring new ways to make payments. “Buy Now, Pay Later” options grew 166 percent YoY in March, after growing 215 percent YoY in the first two months of the new year. On a state-by-state basis, Florida, Washington, Colorado, Michigan, and West Virginia saw the highest growth with this payment method.
The pandemic also continues to shift where consumers spend their money, as online grocery sales grew 17 percent from March 7-21 (compared to a pre-pandemic period from August 15-31, 2020). In the same time period, sporting goods grew 15 percent. Craft supplies and book sales however, have both declined 23 percent and 14 percent, respectively. Certain categories still experienced high out-of-stock rates. In February 2021, consumers shopping for baby and toddler products saw 3.2x more out-of-stock messages than average (groceries 3.1x above average — jewelry 2.8x above average).
In the survey of over 1,000 U.S. consumers, Adobe also discovered a disconnect between what people say and what the data shows. 37 percent of respondents said they would use their stimulus checks to pay bills (14 percent to pay debts, 29 percent to save, 8 percent to invest and 3 percent to pay rent). Only 6 percent would “buy something extra.” The surge in March 2021 e-commerce however, highlights the gap between what consumers hoped to do and the draw of impulse purchases.
The continued surge online is also shifting our understanding of the overall economy. Austan Goolsbee, professor at the University of Chicago Booth School of Business, and former chairman of the Council of Economic Advisors, shares his take on the importance of measuring the digital economy and Adobe’s role here:
Global e-commerce expected to surpass $4 trillion in 2021
Adobe is issuing a global figure in online shopping for the first time. e-commerce worldwide reached $876 billion in the first three months of 2021, up significantly at 38 percent YoY growth. At current growth rates, Adobe forecasts that global e-commerce will hit $4.2 trillion for 2021. In the U.S., Adobe expects e-commerce to hit $1 trillion in 2022.
Adobe is also releasing data specifically on markets in the United Kingdom and Japan. In the UK, e-commerce growth outpaced the U.S., growing significantly at 66 percent YoY in the first 3 months of 2021 — reaching $39 billion in spend. The U.S. grew 39 percent on a larger base, hitting $199 billion in the same time period. Half of the revenue came from smartphones in the UK, with mobile share of spend growing 6 percent YoY.
As UK shoppers stayed home, web visits grew 29 percent YoY. This contributed the most to revenue growth, as consumers placed modestly larger orders (up 9 percent YoY). Retailers did do a better job in driving conversion (up 18 percent YoY), while at the same time consumers have become more proficient with ordering online, with revenue per minute up 23 percent YoY in Q1 2021.
In Japan, e-commerce grew at a more modest pace. Online sales increased 15 percent YoY in the first three months of 2021, reaching $38 billion. Sixty-four percent of revenue came via smartphones, which is up 2 percent YoY. While more Japanese consumers went online (visits up 19 percent YoY) and placed larger orders (up 15 percent YoY), it was in part offset by lower conversion (down 16 percent YoY).
Shoppers in the UK have also been quick to adopt online grocery shopping. In a survey of over 1,000 respondents (per region), 39 percent of UK consumers report shopping for groceries online every month, compared to 27 percent in the U.S. and 24 percent in Japan. Over half (52 percent) of consumers in the UK believe they are saving money by shopping for groceries online (51 percent in the U.S. — 54 percent in Japan)
While retailers around the world are benefiting from strong consumer interest in e-commerce, there is room for improvement. Increased website traffic accounts for nearly 64 percent of revenue growth, and average order values have increased at the rate of 65 cents per month (over the last three years). Conversion, however, remains flat. This indicates consumers are abandoning shopping carts or foregoing the online experience all together. There is room for growth here, as new people are introduced to e-commerce. In a survey of over 1,000 consumers (per region), 15 percent of UK consumers say they never purchased anything online prior to March 2020 (9 percent in the U.S. and 8 percent in Japan).
METHODOLOGY: The Adobe Digital Economy Index offers the most comprehensive set of insights of its kind, based on analysis through Adobe Analytics that covers over one trillion visits to U.S. retail sites and over 100 million SKUs in 18 product categories — more than any other technology company. For travel insights, Adobe Analytics measure transactions from 7 of the top 10 U.S. airlines and 8 of the top 10 U.S. hotels. Global views are based on transactions in over 80 countries across Americas, APAC and EMEA (more than any other research firm or technology company). Companion survey findings are based on responses from over 3K consumers across the U.S., UK and Japan (18 years or older) fielded between February 26 - March 2, 2021, and March 24 - March 29, 2021.