Anxious anticipation dominated the run-up to Cyber Five 2022. To their great relief, the after-event saw high fives liberally exchanged amongst brands, retailers and marketplaces. Even if the rest of the holiday season is a wash-out, even if what we saw this BFCM is pull-forward spend from the rest of the holiday season, the consensus is we are in good space.

What gives? Our takeaways.

Online sales this Black Friday through Cyber Monday continued to maintain the upward momentum of the past years. US consumers spent $35.27B online overall during Cyber Week — a 4% gain over the last year — at a time when inflation in the US is about 7%. It’s around a full percentage point higher than the sales growth for Singles Day 2022 in China — a chest-thumping moment. Why Singles Day sales slumped from an annual average growth rate of 34% between 2014 and 2021, to 2.9% in 2022 would clearly be a digression — perhaps for another day. Nevertheless, Cyber 5 is only a part of the US holiday season, representing about 10% of overall sales in the fourth quarter of the year. Twenty-one finger-crossed days still remain until Christmas.

No denying that BFCM 2022 data from Adobe Analytics (online sales +4% y-o-y) and Shopify’s GMV (+19% y-o-y) quenched the anxious anticipation quite well. There’s however strong evidence that the growth of online sales during Holiday 5 is on a downward trend, over the years. Counts from Adobe Analytics and Shopify confirm a trending slowdown in sales growth, since 2019.

The topline growth this year wasn’t achieved without some serious deep discounting though: An average of 30% and up to 38 - 40%, in the US. And it wasn’t all inventory-led — that’s the whisper raising concerns on margins, profitability and sustainability. The average discount across the Cyber Five on electronics was 23.6%, toys 33.3%, and apparel 15.1%, per Adobe Analytics. Shoppers picked deals from key categories that struggled throughout the year — televisions (discounted 12.93%), computers (16.4%) and furniture (5.2%) — among them.

Amazon Ads were about 6 - 15% more cost effective this Black Friday through Cyber Monday, compared to 2021. Pullback among some advertisers in anticipation of a lukewarm holiday turnout presented great opportunities to agile and aggressive marketers to increase their Share of Voice, at lower CPC’s (Cost Per Click).

US shoppers are quite leveraged. Online and in-person transactions using Buy Now, Pay Later (BNPL) grew 120% over the BFCM days relative to pre-holiday levels, according to Block. Between June 2021 and March 2022, delinquency rates for some pay-later services more than doubled — from 1.7 percent to 4.1 percent at Afterpay, for example. Delinquency rates for major credit cards remain unchanged, at roughly 1.4 percent. At stake is an expected $75.60B in US BNPL payment volume this year, per Insider Intelligence forecasts.

Decelerating sales growth in 2022 and a secular downward trend over the past few years, squeeze in a few dollops of deep discounts, simmer with generous slices of leveraging – what we have is a steamy stir fry for commerce in 2023.

‍Sathish Rangarajan, Industry Analyst, PipeCandy contributed to this newsletter.

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