EXECUTIVE PROGRAM
UK Online Spending hits £8.0 Billion in January with Buy-Now-Pay-Later services used in 12% of transactions
by Suzanne Steele
I’m pleased to introduce you to the Adobe Digital Economy Index (DEI) which uses Adobe Analytics to analyse tens-of-billions of visits to retail sites from UK consumers. Each month we will report on consumer online spending, share insights on key trends and identify opportunities for businesses to keep up with evolving customer expectations.
January’s data revealed that UK shoppers spent £8.0 billion online in January 2023, a drop of just 1.4% compared with January 2022, as consumers snapped up seasonal bargains. Taking into account the increased pressure on consumer spending power this year compared with 2022, a year-on-year drop of just 1.4% shows that the post-Christmas sales period still holds great importance for retailers and shoppers alike.
At the end of January, the Bank of England announced that inflation may have peaked, which is good news for consumers in the mid- to long-term. However, our data also revealed an increase in the use of buy-now-pay-later services as consumers sought to spread the cost of January purchases, showing continued concern for their finances and spending power in the short term.
A Warm Investment
The combination of continued freezing temperatures across most of the UK in January and increased energy prices pushed demand for cold weather products to a higher level than expected. Products such as heated blankets, hot water bottles, thermal curtains, draft excluders, floor lamps, coats and slippers proved popular. Demand for electronics also remained high with products like AirPods, tablets, laptops and gaming consoles continuing to see momentum following the Christmas period.
Spread the Cost
Adobe Analytics data identified an increase in the use of Buy Now Pay Later (BNPL) services, as consumers sought to spread the cost of January purchases to ease the pressure on their finances caused by continued high levels of inflation and the cost-of-living crisis. BNPL was used in 12% of online purchases in January, representing a year-on-year increase of 10.7%.
The data also revealed that consumers are also using BNPL to finance larger purchases, with the average order value for BNPL orders in January grew by 18% year-over-year.
A Steady Shift to Online
Consumers spent a total of £8.0 billion online in January – a slight decrease of just 1.4% compared to 2022. Despite this short-term decline in online spending, the longer-term trend shows continued momentum for the digital economy. UK consumers spending 39% more online compared with figures from January 2020, representing an annualised growth rate of 11.9% over the last three years.
Mobile Remains The Dominant Channel
January saw even more spending coming from the palm of consumers’ hands – with 3 in 5 (59.7%) purchases taking place on smartphones – a 10.3% YoY increase in share.
Overall, consumers spent £4.7 billion with their mobile devices in the first month of the year.
Consumers opt for Click and Collect to keep delivery costs down
This fulfilment method was used in 8.2% of online orders in January. When compared to historic norms of around 6%, this suggests that shoppers are seeking to reduce the amount spent on delivery charges, and are avoiding making extra purchases in order to reach free delivery thresholds.
Understanding the customer’s journey and their evolving preferences and behaviours is key to getting ahead in the digital economy. Those brands that show up on the right channel with timely, relevant and useful experiences will benefit from meaningful and trusted relationships with their customers that drives loyalty.
Adobe Digital Economy Index
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 January 1 to January 31 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.