(Reuters) -U.S. online spending rose nearly 9% during the 2024 holiday season, with shoppers increasingly buying products such as TVs and LEGO sets on their smartphones, data from Adobe (NASDAQ:ADBE) Analytics showed on Tuesday.
Holiday spending from Nov. 1 through Dec. 31 rose 8.7% to about $241.4 billion online, higher than Adobe's initial forecast of $240.8 billion made in September. In 2023, online spending during the same period grew 4.9%.
Retailers, including Walmart (NYSE:WMT) and Target (NYSE:TGT), spent more on ads, offered early discounts and targeted promotions, and used artificial intelligence to drive sales during a shorter holiday season and draw in bargain-hungry customers.
But, the higher-than-forecast jump in online spending may not translate into profits for retailers, said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
Walmart, Target, Macy's (NYSE:M) and other major retailers do not report on the full results of the holiday season until later this winter.
"I'm a little nervous going into earnings season to see if the big gains online translate into big profits for retailers," Jacobsen said, adding that the discounts that drove sales can eat into margins.
According to Adobe, 54.5% of online shopping transactions took place through a smartphone this holiday season, compared with 51.1% in the same period in 2023.
"The 2024 holiday season showed that e-commerce is being reshaped by a consumer who now prefers to transact on smaller screens and lean on AI-powered services to shop more efficiently," said Vivek Pandya, lead analyst, Adobe Digital Insights.
Increasing reliance on AI-powered chatbots such as Amazon (NASDAQ:AMZN)'s Rufus for product recommendations and shopping assistance drove a 1,300% rise in customer traffic to retail sites, according to Adobe, which tracks e-commerce by monitoring online transactions across websites by accessing data from 85% of the top 100 U.S. internet retailers.
Salesforce (NYSE:CRM) data also showed that AI-powered chatbots and other shopping features helped consumers purchase and return products during the 2024 holiday season.
Along with convenient shopping and free delivery options, flexible payment methods, such as buy-now-pay-later (BNPL) services, also grabbed the attention of price-sensitive customers, Adobe said.
For the 2024 holiday shopping, BNPL usage accounted for $18.2 billion in online spend, up 9.6% from the last season.