Shoppers Flock to Online Retailers, Driving Record-Breaking Sales and Stock Surges
As the holiday shopping season kicked off, shoppers opted for the convenience and safety of online shopping, driving Black Friday and Cyber Weekend online sales to new heights. According to Adobe Analytics, Black Friday online spending in the U.S. reached a record $9.8 billion, up 7.5% from the previous year. Additionally, online sales during Cyber Weekend surged 7.7% to $10.3 billion. With Cyber Monday sales projected to reach up to $12.4 billion, it is set to become the biggest U.S. online shopping day of the year. This surge in online sales has proven to be a boon for e-commerce-focused retailers, as reflected in the stock market’s positive response.
E-commerce Stocks Surge as Investors Celebrate Strong Sales:
Investors reacted positively to the strong showing in online sales during Black Friday and Cyber Weekend, causing a surge in e-commerce stocks. Shares of Etsy and Wayfair closed up approximately 3% and 7%, respectively, while Amazon’s stock climbed 0.6%. Shopify, a software provider for online retailers, saw its shares close up almost 5% after announcing that merchants achieved a record $4.1 billion in sales. The stock market’s response indicates confidence in the continued growth of online retail.
Sales During Holiday Shopping Period Indicate Consumer Sentiment:
Analysts and investors closely monitor sales during the five-day period from Thanksgiving Day to Cyber Monday as an indicator of overall holiday shopping trends. The National Retail Federation expects an increase in consumer spending this year, projecting a 3% to 4% year-over-year rise in sales for November and December. Despite cooling inflation, high grocery prices, and the resumption of student loan payments impacting some consumers’ budgets, the strong sales during the holiday shopping period suggest positive consumer sentiment.
Buy-Now-Pay-Later Services Gain Popularity:
In an effort to stretch their budgets, budget-conscious consumers have turned to buy-now-pay-later services, leading to increased online spending. According to Adobe, buy-now-pay-later services like Affirm, Klarna, and Afterpay drove $5.9 billion in online spend between November 1 and November 23, a 13.4% increase from the previous year. The popularity of these services has surged, with shares of Affirm closing up almost 12% on Monday. The CEO of Klarna, Sebastian Siemiatkowski, expressed surprise at the strength of buy-now-pay-later services during Black Friday, highlighting the growing market share of these services.
New Entrants Capitalize on Holiday Demand:
Short-form video app TikTok and the Chinese online marketplace Temu capitalized on the holiday shopping demand by offering their own promotions. TikTok, which launched its TikTok Shop storefront in the U.S. in September, provided free shipping and discounts ranging from 20% to 30% off on various items. Temu, a discount marketplace featuring a mix of apparel, household goods, electronics, and beauty products, offered discounts of up to 90% off during Black Friday and Cyber Monday. These new entrants aimed to attract shoppers with enticing deals and unique product offerings.
Conclusion:
The surge in online sales during Black Friday and Cyber Weekend has set new records, indicating the growing preference for online shopping among consumers. E-commerce-focused retailers have reaped the benefits, with their stocks surging as investors celebrate the strong sales. The popularity of buy-now-pay-later services further highlights the changing consumer behavior and the need for flexible payment options. As the holiday shopping season continues, it remains to be seen how these trends will shape the overall retail landscape and the future of online shopping.
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