UK Online Spending hits £8.0 Billion in January with Buy-Now-Pay-Later services used in 12% of transactions

New data from the Adobe Analytics based on tens of billions of transactions, has revealed that UK shoppers spent £8.0 billion online in January 2023, a drop of just 1.4% compared with January 2022, as consumers snapped up seasonal bargains and invested in keeping warm.

The combination of continued freezing temperatures across most of the UK in January and increased energy prices pushed demand for cold weather products. Products such as heated blankets, hot water bottles, thermal curtains, draft excluders, floor lamps, coats and slippers proved popular for UK consumers in January. Demand for top holiday electronics remained high as products like AirPods, tablets, laptops and gaming consoles continued to see momentum.

Adobe Analytics also identified an increase in the use of Buy Now Pay Later (BNPL) services, as consumers sought to spread the cost of January purchases to ease the pressure on their finances caused by continued high levels of inflation and the cost-of-living crisis. Buy Now Pay Later was used in 12% of online purchases in January, representing a year-on-year increase of 10.7%.

The data also revealed that consumers are also using BNPL to finance larger purchases, with the average order value for BNPL orders in January grew by 18% year-over-year.

“Taking into account the increased pressure on consumer spending power this year compared with 2022, a year-on-year drop of just 1.4% in January online spending shows that the post-Christmas sales period still holds great importance for retailers and shoppers alike,” said Suzanne Steele, Vice President and Managing Director for Adobe in the UK.

“While last week’s suggestion by the Bank of England that inflation may have peaked is good news in the mid- to long-term, the increased use of buy-now-pay-later services to spread the cost of January purchases, shows that consumers are still keeping a close eye on their finances in the short term.”

The total amount spent online by consumers in January decreased by 1.4% compared to 2022, falling to £8.0 billion. Despite this short-term decline in online spending, the big picture is showing a continuous shift towards the digital economy with UK consumers spending 39% more on online purchases compared to January 2020, a healthy 11.9% annualised growth rate over the last three years.

Mobile Remains The Dominant Channel

The trend towards mobile shopping is continuing at pace, with January seeing even more spending coming from the palm of consumers’ hands – with 3 in 5 (59.7%) of purchases taking place on smartphones, representing a 10.3% YoY increase in share.

Overall, consumers spent £4.7 billion with their mobile devices in the first month of the year.

Consumers opt for Click and Collect to keep delivery costs down

This fulfilment method was used in 8.2% of online orders in January. When compared to historic norms of around 6%, this suggests that shoppers are seeking to reduce the amount spent on delivery charges, and that they are avoiding extra purchases to reach free delivery thresholds.

Adobe Digital Economy Index

The Adobe Digital Economy Index (DEI) used Adobe Analytics to analyse tens-of-billions of visits to retail sites from UK consumers, 100 million SKUs, and 18 product categories in the period January 1 to January 31 2023, to provide the most comprehensive view of the UK digital economy. Adobe Analytics is part of Adobe Experience Cloud, relied upon by major retailers to deliver, measure, and personalise shopping experiences online.

Global figures are based on analysis of over a trillion visits to ecommerce sites and direct transaction data of consumers from over 80 countries – more than any other technology company or research firm.

Find out more about the Digital Economy Index here.