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As Online Shopping Increases, the Web Is Experiencing Its Own Brand of Inflation
As Online Shopping Increases, the Web Is Experiencing Its Own Brand of Inflation
Online prices have always fallen as the holiday shopping season approaches. In October 2019, the average online price fell 6.6% from one year ago.

Online prices have always fallen as the holiday shopping season approaches. In October 2019, the average online price fell 6.6% from one year ago. The coronavirus changed all that. In 2020, consumers began to flock online amid nationwide shutdowns and a severe shortage of goods.

According to the Adobe Digital Index, prices online rose 1.9% last month from October 2020. This is the 17th consecutive rise dating back to June 2020. Prices have dropped in some categories such as appliances and sporting goods, but not to the same extent they were in previous years.

For example, electronics saw prices drop from 8.7% a month ago to Nov. 6. However, this discount was 13.2% less than a year ago. Similar to sporting goods, prices fell 2.8%, compared with a drop in 11.2% a previous year. Appliances were also down 4.6% versus 10.2%

Adobe tracked 18 categories and only one saw higher prices compared to the historical average from 2015 to 2019. There was books. Some goods, which have been more redirected to the internet during the pandemic, are now seeing price increases.

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"One of the ones that are a proxy for overall inflation, groceries, have been seeing consistent online inflation," Vivek Paandya, chief analyst at Adobe Digital Insights, says.

The online inflation rate is still below the 6.2% annual average for overall consumer inflation. Many shoppers will experience a shock as online sales rise to 1 in 4 dollars for every dollar spent, compared to 1 in 5 during previous holiday seasons.

Pandya states that consumers are seeing a double hit to pocketbooks. "Everyday expenses like rent and gasoline are rising while big holiday shopping is going to be more expensive."

Pandya adds that out-of-stock notifications are commonplace. This is 250% more than pre-pandemic norms."

These changes couldn't have come at a better time. Morning Consult, a data intelligence company, found that 39% of consumers intend to do most of their holiday shopping online, while 36% plan to split their shopping between online and in-store. One-quarter of respondents plan to shop in-store for most of their holiday shopping.

42% of millennials prefer shopping online, while 21% say they prefer to shop in stores. Retail analysts expect a strong holiday season with sales revenue rising 19% from Nov. 6, and unit sales increasing 4% compared to pre-pandemic levels two years ago.