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Good News – Bad News: Deflation Hits Online Sales in July

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Good News - Bad News: Deflation Hits Online Sales in July

Here’s a word you haven’t heard in a while: deflation. But the devil is in the details, and Adobe came supplied with plenty in its Adobe Digital Price Index for the month of July. Sellers dealing with rising costs themselves may not be thrilled with the findings in the report that indicates sellers may be getting squeezed in numerous categories.

Online prices dropped 1% year-over-year and 2% month-over-month in July, according to the Index. The decline was driven by electronics, apparel, and toys categories, but the report found food costs remained high.

The Adobe Digital Price Index tracks online prices across 18 categories. A spokesperson for Adobe said ecommerce has entered deflation for the first time in over 2 years.

July Prices Compared to June
Only 4 of the 18 categories in the DPI saw price increases in July month-over-month. Price drops were observed across 14 categories including electronics, personal care products, office supplies, jewelry, books, furniture/bedding, toys, home/garden, appliances, flowers/related gifts, computers, sporting goods, medical equipment/supplies, and apparel.

July Prices Compared to a Year Ago
In July, 11 of the 18 categories tracked by the DPI saw year-over-year price increases, with groceries rising the most. Year-over-year price drops were observed in seven categories in July: electronics, jewelry, books, toys, computers, sporting goods, and apparel.

Some noteworthy findings: Prices for electronics, the largest category in ecommerce, dropped 9.3% year-over-year. Prices for apparel dropped 1% year-over-year. And toy prices dropped 8.2% year-over-year, a record low for the category in the last 31 months.

Consumer Spending
In July, consumers spent $73.7 billion online, $400 million less than the prior month ($74.1 billion). On a year-over-year basis, however, ecommerce spend in July grew 20.9%, which Adobe attributed in large part to Amazon Prime Day.

The Culprits behind the Numbers
Adobe Vice President of Growth Marketing and Insights Patrick Brown said, “Wavering consumer confidence and a pullback in spending, coupled with oversupply for some retailers, is driving prices down in major online categories like electronics and apparel.”

Online sellers may not be thrilled with lower prices and the reasons behind them, especially if they don’t see the trend spread to products and services they themselves consume as business owners. But Brown said the drop provided a bit of relief for consumers as the cost of food continues to rise online and in stores.

Powered by Adobe Analytics, the Adobe Digital Price Index analyzes one trillion visits to retail sites and over 100 million SKUs across 18 product categories. You can find the press release on the Adobe.com website.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.

One thought on “Good News – Bad News: Deflation Hits Online Sales in July”

  1. Supply and Demand…
    It is evaluated that just because consumers are not “choosing” to purchase electronics or apparel, it’s because the consumer is feeling the strain of inflation. HOWEVER, I do not believe this is true; too much data says that consumers are spending their money in different ways. Tired of Covid lockdowns, U.S. consumers are spending money in entertainment. Maybe a new iPad is not necessary for those who are looking to get out of the house.

    And about food costs…
    I live on the West Coast and I shop at Kroger, Safeway and Whole Foods. I find there is NO real inflation for the food products I buy. I’m sick of this food inflation data because it’s not true for many. It depends on the grocery retailer…volume sales at lower prices are what many grocery stores rely on for profit.

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