E-Commerce Is on a Tear, But How Much of That Volume Stems From Roaring Inflation?

It’s a well-known fact that the pandemic drove consumers to e-commerce for goods they might otherwise have shopped for in stores, but now evidence is emerging that some of that increase in online spending is a result of steadily rising inflation.

Consumers spent $83.1 billion online last month, up 7% from March 2021, but of that total, some $2.8 billion represented higher prices, according to the latest Adobe Digital Economy Index, released early Tuesday. All told, inflation in U.S. e-commerce purchases amounted to 3.6% in March compared to March 2021, and 0.3% over February, Adobe reported. The biggest year-over-year price increases were noted in apparel (up 16.3%) and in groceries (up 9%, a record for that category). 

Also in March, pandemic-related supply-chain issues continued to plague e-commerce, with consumers seeing 3.1 billion out-of-stock messages while navigating online shopping sites, according to the report. That’s up from 2.8 billion in the previous month, though Adobe’s report notes February is three days shorter than March.

The monthly report, from San Jose, Calif.-based software firm Adobe Inc., tracks key slices of the total w-commerce market and adds that inflation in online shopping has now been noticeable for 22 straight months, starting in June 2020. The rate seen that month amounted to 0.6% year-over-year.

Still, the good news for e-commerce merchants may lie in the eagerness of consumers to embrace relatively new shopping categories as they venture online, according to Adobe. “Consumers are feeling a greater hit to their pocketbooks, with consistently high levels of online inflation in categories such as groceries and pet products,” said Patrick Brown, vice president of growth marketing and insights at Adobe, in a statement. “But while ecommerce prices have risen more than years past, durable demand shows that consumers are embracing more personalized experiences in the digital economy as well as the conveniences of online shopping, particularly for growing categories like groceries.”

Overall, the report notes yearly price increases in 14 of the 18 product categories it tracks, led by apparel. The other four categories—electronics, jewelry, toys, and computers—saw price decreases. Month over month, price rises were noted in 12 of the categories.

Adobe says its index tracks more than 1 trillion visits to U.S. sites and more than 100 million stock-keeping units within the 18 product categories.

While increases in online sales continue to be robust compared to those observed in in-person shopping, evidence is emerging that e-commerce may be normalizing. Online sales totaled $218.5 billion in the fourth quarter, up 9.4% year-over-year, according to the U.S Department of Commerce. That contrasts with yearly growth rates as high as 39% in the last quarter of 2020 and the first period of 2021.