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Home » U.S. Online Retail Prices Rose a Record 3.5% in November

U.S. Online Retail Prices Rose a Record 3.5% in November

e-commerce package
An online shopper opens a package. Photo: Mikhail Nilov/ Canva.
December 9, 2021
Bloomberg

U.S. online prices increased 3.5% in November from a year earlier, the biggest gain since software company Adobe Inc. started tracking the digital economy in 2014.

The surge, marking the 18th straight monthly increase, is another sign of how broad-based inflation has become in the country. E-commerce, once the land of discounts — especially during the holiday season, — has become a steady source of price hikes in the pandemic recovery.

Eleven of the 18 categories tracked by Adobe saw price increases in November, led by clothes, flowers and home-improvement tools. 

Although online inflation remains below overall price increases in the country, it’s creeping up. 

Nationwide, inflation is running at the highest levels in decades, and government data due Friday is expected to show an increase of 6.8%, based on economists’ forecasts. That would be the biggest gain since the early 1980s.

E-commerce has become ever more ubiquitous in the pandemic era, when Americans stuck at home have gotten used to ordering everything from their phones or computers. Last month, $114 billion was spent online, a 13.6% year-over-year increase. 

The surge in demand also meant that many online shoppers were disappointed. The number of out-of-stock messages rose to over 3 billion last month from 2 billion in October, according to Adobe.

The company tracks over 100 million products. Apparel prices rose the fastest last month with a 17.3% annual gain, while electronics and toy prices declined as holiday discounts kicked in.

Online retailers have traditionally used discounts and a convenient shopping experience to attract consumers. The competition helped reduce markups and put downward pressure on prices.

The pandemic has changed that dynamic.

Research by Harvard University’s Alberto Cavallo found that a high degree of flexibility — prices falling amid excess supply and rising amid excess demand — as well as uniform pricing across locations can make online prices more sensitive to aggregate shocks, such as changes in gas prices and supply chain disruptions.

“Ongoing supply chain constraints and durable consumer demand have underpinned the record high inflation in e-commerce,” said Patrick Brown, vice president of growth marketing and insights at Adobe.

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