COVID-19 e-commerce bubble is inflating prices, Adobe finds

If you’ve waited to purchase a new computer for working at home, you’ll have a harder time finding an online deal for the first time in six years.

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AndreyPopov, Getty Images/iStockphoto

Adobe has released its Digital Economic Index (DEI) for June, and has found negative growth in digital purchasing power for the first time since it began tracking it in 2015. The drop was 1%, which Adobe said means a digital shopping basket that cost $1 in June 2019 now costs $1.01.

Adobe’s June DEI index said that the negative digital purchasing power growth in June was “a profound milestone.” 

SEE: IT hardware procurement policy (TechRepublic Premium)

While 1% may not seem like a lot, that extra penny on the dollar can add up to a lot when purchasing expensive goods, like computers, which have increased in price by 6.2% since March 2020 when lockdowns began. 

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The increase in computer prices has wiped out decreases that have occurred since June 2019, and is the first significant spike in prices since January 2014, when Adobe began tracking prices in that category. 

Vivek Pandya, digital insights manager at Adobe, said that the increase in computer pricing is slowing down to pre-coronavirus levels and is actually only up a little less than 1% when compared to the same time in 2019. 

That said, if you think you’re going to need a new laptop, desktop, or two-in-one computer in the near future, it’s not a bad idea to buy one now in case price increases continue.

E-commerce inflation across the board

June is the time of year when prices in online shops tend to decline, Pandya said, but that’s not the case in 2020. 

“COVID-19 shelter-in-place mandates and store shutdowns are likely behind many of these atypical ups and downs,” Adobe said, but there are indications that things are still behaving normally in some aspects. 

For example, June e-commerce sales declined to $73 billion USD, down from $82.5 billion in May. Those total sales numbers are atypical (June 2020 online sales are 76.2% higher than June 2019, but the decrease from May to June is typical of the average year.)

SEE: Return to work: What the new normal will look like post-pandemic (free PDF) (TechRepublic)

As online sales decrease, prices tend to trend downward along with them. “We’ve always thought of the online marketplace as a ‘value marketplace’ for consumers, meaning consumers can get a bit more bang for their buck, and this is supposed to be a more favorable time of year for them in terms of prices. But they aren’t getting that relief,” Pandya said.

Physical retail locations have reopened, which has driven decreases in several categories between May and June: online purchases picked up in stores are down 21%, online grocery sales have dropped by 18%, and online apparel sales have decreased by 15%. 

The drops, Adobe said, are “a likely sign of shoppers getting antsy to get out more and feeling better about visiting physical stores,” and shows how consumer behavior is reflecting COVID-19 opinions.

Customer loyalty, the report found, was a major factor for e-commerce companies during May and June, which found that new customer sales dropped off in June, but loyal customers (those who have purchased at least twice prior on a site) have remained steady in their purchasing. 

“With physical stores reopening and slightly higher prices online, retailers will need to offer exceptional online customer experiences to attract and retain customers,” Pandya said. This goes double for a moment in time where prices are increasing and customers are generally anxious to get out of the house and shop in physical stores.

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