The latest Adobe Digital Economy Index data from the UK, based on Adobe Analytics data, revealed that UK consumers spent a total of £7.8 billion online in May 2023, down 2.5% from the previous month, and down 1.3% YoY.
Considering the impact of the additional Coronation Bank Holiday – which saw spending drop by 20.4% compared with the same weekend in 2022 – May’s improving figures show early signs of consumer confidence and online spending power returning.
Buy Now Pay Later usage remains steady
UK consumers racked up another £1.3 billion pounds of Buy Now Pay Later debt in May (equivalent to 16.5% of total online spending for the month), taking total spending on these services to £6.2 billion for the first five months of 2023.
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Adobe’s analysis also revealed a 6.5% increase in average order values using Buy Now Pay Later compared with April, and an acceleration in the amount spent using Buy Now Pay Later from 18th May onwards, indicating consumers are more reliant on BNPL services in the run up to payday.
Social shopping shifting platforms
For the first time, the Adobe Digital Economy Index has taken an in-depth look at how social media platforms drive traffic to ecommerce websites, and in particular, how newer platforms like TikTok continue to eat away at the share of social media traffic of established players, like Facebook and Instagram.
In May 2023, Adobe’s analysis identified a significant rise in e-commerce traffic from TikTok content, growing 378% since January of 2022. While TikTok’s overall visits share is relatively small (less than 5%), it is growing at an impressive rate with 164% year-over-year growth in May.
In contrast, Instagram’s share of traffic was down 2% year-over-year and Facebook was down 18%, suggesting a growing capacity for TikTok to influence e-commerce sales.
“While the prices of essential items like groceries continue to increase in price both online and offline, the year-over-year decrease of just 1.3% in online spend for May shows that spending power and consumer confidence is starting to return,” said Suzanne Steele, Vice President and Managing Director for Adobe in the UK.
Online inflation continues to rise for essential items
The online price of essential items continued to grow in May, with groceries costing 1.2% more than the previous month (9.7% more than last year). The prices of pet products also grew by 0.7% compared with the previous month.
In contrast, non-essential items such as electronics and apparel saw another month of falling prices as retailers seek to stimulate demand.
Consumers preparing for summer heat
With temperatures continuing to rise, products such as camping equipment, patio furniture and covers, fire pits, swimsuits, sunscreen, beach towels, and picnic baskets all proved popular in May, with data showing that spending on these items accelerated in the lead up to the bank holidays.
Additional insights include:
- Mobile remains the channel of choice
- The trend towards mobile shopping is continuing, with May seeing even more spending coming from the palm of consumers’ hands – with 59% of purchases taking place on smartphones, representing a 13.9% YoY increase in share.
- Overall, consumers spent £4.6 billion with their mobile devices in May this year.
- Click and Collect remains stable
- This fulfilment method was used in 9.0% of online orders in May (for retailers who offered the service), down slightly from 9.1% the previous month, and from 8.4% in the year prior.
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 May 1st to May 31st 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.
