Online Shopping Already Hit Holiday-Level Peaks This Year

Elizabeth Renter
By Elizabeth Renter 
Edited by Kathy Hinson
Online Shopping Already Hit Holiday-Level Peaks This Year

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Had the coronavirus pandemic hit 20 years ago, ordering groceries and toilet paper from the comfort of your sofa wouldn’t have been nearly as easy. But in May alone, Americans spent over $77 billion through online retailers, and the industry saw sales growth typically reserved for the holiday rush.

Retail sales contribute trillions of dollars to the U.S. economy each year and support millions of U.S. workers. Despite global economic uncertainty and unemployment hitting the retail industry particularly hard in 2020, data indicates online sellers are not experiencing the economic impact of the pandemic the way others are. Indeed, retailers and consumers both benefited from the convenience of buying online, as virtual shopping carts and free shipping may have kept more Americans indoors and helped keep the economy afloat.

This holiday season may be unusual in many ways, but don’t look for the online shopping boom to lose much steam. Fewer people plan on buying holiday gifts this year than in years past, according to the recent NerdWallet Holiday Shopping Report, perhaps in part due to still-high unemployment rates. However, among those who will buy, ordering online is more popular than ever, and these shoppers have had several months (and plenty of practice) to nail down their favorite retailers.

Online retail boom came early

Online sales typically stay relatively stable through spring and summer months before beginning their annual holiday climb in October, according to monthly retail sales data from the U.S. Census Bureau. However, in 2020, the data reflected skyrocketing online sales beginning in March.

From February to May, when retail sales overall took an initial dip before recovering, online sales climbed 43%, growth not typically seen outside of the holiday season.

At their peak in May, online sales were 30% higher than in May 2019, reaching more than $77.4 billion, and they’ve only dropped modestly since. As of August, monthly online retail sales were $13 billion (22%) over where they were in August 2019. And these figures are after adjusting for inflation.

By contrast, overall retail sales plummeted in April, falling 12% from the prior month. They rebounded 23% month-over-month in May. As of August, total retail sales are roughly 1% higher than they were in August 2019.

Shopping searches arrive early, too

These atypical shopping trends are not only reflected in online retail sales data, but also in Google searches. Two search terms specifically — “are stores open” and “free shipping” — have very predictable annual trends. The former peaks the weeks of Thanksgiving and Christmas, and the latter trends highest throughout that month-long period. In fact, charting those terms resembles a steady pulse, year after year.

This year, however, both terms saw unprecedented relative popularity as the pandemic and subsequent business shutdowns swept the nation. Googlers were hunting down retailers with free shipping at levels nearly comparable to the holidays. In March and again in late May, the volume of searches for “are stores open” surpassed that seen in Thanksgiving weeks of years past.

Online stores preferred, but fewer plan on holiday shopping

Most Americans who plan on shopping for holiday gifts this year (67%) say they’ll do the majority of that shopping online, according to NerdWallet’s 2020 Holiday Shopping Report. That’s up from 62% last year.

And while the anticipated average spending of those shoppers is comparable to last year, there is a significant increase in the share of those not planning on buying gifts at all. In fact, 22 million fewer Americans plan on shopping for gifts this holiday season when compared to last year, according to analysis of the NerdWallet survey figures. Fewer intend to buy gifts this year than any of the previous seven years NerdWallet has asked about holiday shopping plans.

This drop in shopping interest could be due to continued high unemployment and economic insecurity among some swaths of the population. And the stable year-over-year anticipated average spend among those who do plan to shop could indicate a sense of security and optimism for groups less affected by the pandemic’s economic upheaval.

Holiday shopping tips for 2020

For those who plan to shop, here are some tips specific to the unusual nature of 2020.

Order early, and skip the middleman (you). More than ever, getting gifts to your loved ones on time will mean ordering early. Retailers may be experiencing supply chain issues due to the pandemic, and the mail may be running behind too. So plan ahead, and if you typically have gifts sent to you first for wrapping, consider skipping that step as the holidays get closer.

Don’t wait for Black Friday. Holiday sales are coming earlier this year. If you're watching them from the beginning, you're more likely to catch the things on your list and avoid paying full price. Plus, those packages should get delivered in time.

Consider trimming the gift budget. If you think money might be tight for your friends and family — or if it is for you — take the initiative to suggest a lower spending limit. It could bring welcome relief to the folks you’re planning to exchange gifts with.

Donate to charities in your recipient's name. If you know the person you’re shopping for has a favorite charity — and this year has provided us with the opportunity to support many — donating makes gift-giving easy and can reduce your taxable income too. For tax year 2020, you can deduct up to $300 of cash donations “above the line,” or without having to itemize your deductions.

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We analyzed seasonally unadjusted retail sales data from the U.S. Census Bureau’s Monthly Retail Trade Report, adjusting all figures for inflation to August 2020 dollars using the Consumer Price Index from the Bureau of Labor Statistics. This data was the most recent available on the date of download: Oct. 26, 2020.

“Online sales” refers to sales among electronic shopping and mail-order houses, as defined by the U.S. Census Bureau.

Google Trends data was accessed on Nov. 5, 2020. Figures represent search volume relative to the highest point on the chart, with 100 representing peak popularity.

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