UK consumers spent £8bn online in January, 26.7% less than in December 2022, and a year-on-year decrease of 1.4%. However, the use of Buy Now Pay Later (BNPL) grew, as consumers sought to spread the cost of January purchases to ease the financial pressure caused by continued high levels of inflation and the cost-of-living crisis.
BNPL was used in 12% of online purchases in January, up from 10.7% on January 2022. January average order value for online BNPL was up 18% year-over-year as consumers chose this method of finance for larger, more expensive items, spreading the cost over multiple months, in response to the current economic environment.
So finds the latest data from Adobe, in its latest Adobe Analytics report, which covers tens of billions of visits to UK retail sites, 100 million SKUs, and 18 product categories, analysing sales transactions online to provide the most comprehensive view into UK ecommerce.
The digital economy remains a strong growth driver for brands. While UK consumers spent less in January than the previous year, the growth of UK ecommerce in the longer term remains strong. Last month consumers spent 39% more on online purchases compared to January 2020, which represents a 11.9% annualised growth rate over the last three years.
“Taking into account the increased pressure on consumer spending power this year compared with 2022, a year-on-year drop of just 1.4% in January online spending shows that the post-Christmas sales period still holds great importance for retailers and shoppers alike,” says Suzanne Steele, Vice President and Managing Director for Adobe in the UK. “While last week’s suggestion by the Bank of England that inflation may have peaked is good news in the mid- to long-term, the increased use of buy-now-pay-later services to spread the cost of January purchases, shows that consumers are still keeping a close eye on their finances in the short term.”
The report also shows that mobile was the most popular online shopping channel in January, with 59.7% of purchases taking place on smartphones – a 10.3% YoY increase in share. Overall, consumers spent £4.7billion with their mobile devices in the first month of the year.
Click and Collect has also become fundamental, with the fulfilment method 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 that they are avoiding extra purchases to reach free delivery thresholds.
