Paid search drove U.S. consumers to spend, but a payment strategy allowed them to pay overtime helped retailers reach a record $222.1 billion in online holiday sales Nov. 1 through Dec. 31, up 4.9% from the same period in 2022, according to the latest Adobe Digital Insights report.

Buy Now Pay Later hit an all-time high of $16.6 billion for ecommerce purchases in the last two months of 2023, up 14% compared with last year’s holiday spending.

November became the biggest month on record for the payment method, reaching $9.2 billion, up 17.5% YoY. Cyber Monday was the biggest day on record — at $940 million, up 42.5% YoY.

For the entire year, 2023, BNPL drove $75 billion in online spend, up 14.3% YoY, and $9.4 billion more than 2022.  

Vivek Pandya, lead analyst, Adobe Digital Insights, views Buy Now Pay Later as a strategy most effective “driving record spend online during big days like Cyber Monday and Black Friday, and a record 11 days that surpassed $4 billion in daily spend this season.” 

The Adobe Digital Price Index tracks online prices across 18 product categories shows ecommerce prices have fallen for more than a year now — down 5.3% YoY in Dec. 2023. 

This season, mobile shopping overtook desktop hitting a new milestone, with 51.1% of online sales coming through smartphones — up from 47% in 2022. Curbside pickup remained popular with it being used in 18.4% of online orders this holiday season, compared with 21% in 2022.

Where did marketers invest in advertising? Paid search remained the biggest driver of sales for retailers this holiday season at 29.4% of online sales attributable to the channel.

Direct web visits drove 19.3%, affiliates and partners drove 16.6%, organic search drove 15.9%, and email 15.3%. Revenue directly attributable to social media remained at less than 5% of total sales this season, but that share has grown 5% YoY. 

But this year marketers may face a new problem heading into 2024. High credit card debt and Buy Now Pay Later payments left over from the holidays may force marketers to continue to accept Buy Now Pay Later, or find new ways that convince consumers to keep spending.

Deloitte late last year estimated shoppers to spend on average $1,652 during the holidays, and CardRates.com estimated that much of the tab would go on credit cards. An October survey of 1,036 consumers by CardRates.com found 38% of respondents had planned to carry debt into the new year.

Discounts drove end-of-year shopping, with Adobe reporting price cuts on electronics that were deeper than a year earlier. Toys and apparel also had significant discounts.

Adobe Analytics estimated consumers spent $123.5 billion online in November, up 6% year-over-year (YoY), supporting a strong Cyber Week, the five days. That time between Thanksgiving and Cyber Monday drove $38 billion in spend online, up 7.8% YoY. In December, consumers spent a total of $98.6 billion online, up 3.7% YoY, driven in part by discounts that held firm past Cyber Monday.  

Discounts in ecommerce categories like electronics peaked at 31% off listed price, compared with 25% in 2022. Toys saw discounts of 28% vs 34%, and apparel at 24% vs. 19%, respectively.

Computer discounts rose to 24% vs 20%, televisions at 23% vs 17%, appliances at 18% vs 16%, sporting goods at 18% vs 10%, and furniture at 21% vs 8%.   

Paid search drove U.S. consumers to spend, but a payment strategy allowed them to pay overtime helping retailers reach a record $ 222.1 billion in online holiday sales from Nov. 1-Dec. 31, according to Adobe Analytics.