Buy now pay later (BNPL) options for online shopping continue to attract more consumers -- even for groceries -- as prices for goods and services continue to rise.
The Adobe Analytics data released Wednesday at the company’s annual digital summit this year in Las Vegas shows groceries grew 26.7% to $8.4 billion compared with the prior year, as more consumers are opting in to BNPL options.
Demand for electronics slowed following a record holiday shopping season -- falling 5.4% to $13.6 billion -- while apparel fell 0.6% to $11.3 billion, YoY. Home furnishings in February 2023 grew 12.9% to $9.4 billion year-over-year (YoY).
Consumers spent more than $126 billion on home furnishings in 2022 -- up 10.2% year-over-year (YoY) -- as well as $86.8 billion on groceries -- up 10.8% YoY.
While the data shows a demand for online shopping despite inflation rates -- specifically for groceries and home furnishings -- it also shows consumers are delaying payments for purchases through Buy Now Pay Later (BNPL) options that enable consumers to pay for purchases over time.
The share of online purchases using BNPL in 2022 rose 14% YoY, up 27% YoY.
In the first two months of 2023, BNPL order share rose by 10% YoY, although revenue fell by 19% YoY, suggesting consumers are using this payment method for smaller purchases.
Adobe also looked at BNPL usage across major categories including groceries, home furnishings, apparel, and electronics to understand the types of goods in which shoppers want to delay payments.
In the first two months of 2023, groceries’ share of BNPL orders grew 40%, while home furnishings grew by 38%. By contrast, apparel grew by 8%, and electronics fell by 14%.
Consumers are embracing new categories and ways to make payments online, but they are doing so on mobile screens. The last holiday season was a turning point for mobile shopping, where 51% of sales on Cyber Week came through smartphones for the first time.
In 2022, smartphones drove 45% of overall online sales, but on the current growth trajectory, Adobe expects that every month will see smartphones drive the majority (over 50%) of online sales by December 2023.
Retailers with more than $1 billion in annual sales are seeing more success with mobile shopping, driving 38% more visits that result in purchases, compared with retailers that generate between $10 million to $50 million in annual sales. The share of revenue from sales through smartphones is also 8.6% lower for smaller retailers.
Adobe also found that higher prices online, as tracked by the Adobe Digital Price Index (DPI), impact the types of products consumers buy. Adobe’s DPI shows that from January 2019 through February 2023, the cheapest pricing tier grew its share of sales significantly across categories including groceries, up 35.6%, and electronics rose 57.1%.