November 27, 2020

Black Friday 2020: An online-shopping bonanza

Ido Cohen. Portfolio Manager

People don’t celebrate Thanksgiving in the United Kingdom, France or South Africa, but over the past few years, many of them will have experienced (and participated in) Black Friday. What was once the beginning of the US Christmas shopping season has now spread across the world, with retailers seeking to capitalize on the opportunity of making their sales soar.

But to see what this global sales phenomenon truly means for retailers, we’ll take a look at the country that originated this day. In the US, Black Friday weekend has seen steady growth over the years, with US retailers generating almost US$5 billion in online sales on average between 2013 and 20191.

Figure 1. US Black Friday Online Sales
Figure 1. US Black Friday Online Sales
Source: Adobe Analytics as at 31 December 2019

Given the continued restrictions related to Covid-19, many physical stores will be closed or operating at reduced capacity. What has already become the biggest sales weekend in eCommerce is now expected to bring even more shoppers online than ever before.

In our view, US retail sales have been incredibly strong despite the pandemic-induced recession. The consumer sector continues to recover, and there is evidence of pent-up demand. Amazon’s Prime Day 2020, for example, was a record-breaking event for small and medium businesses worldwide with US$3.5 billion in sales, a rate of 60% more than last year2.

Delivery services providers Fed-ex and UPS have signalled that they are operating at full capacity. Many retailers have also stated that shipping times will be longer this year. We believe that even those holiday shoppers that tend to wait to the last minute are more likely to participate in Black Friday weekend this year, and we expect more shopping will be done online than not.

In 2019, Amazon accounted for 54.9% of all sales on Black Friday3. The company is now expected to exceed US$100 billion in quarterly revenue for the first time ever in Q4 20204, which places it into rarefied air and underlines its market dominance.

Amazon is one of the prime holdings in the Invesco Global Consumer Trends strategy, which seeks to invest in global leaders benefitting from a change in consumer behaviour as a result of technology and increased internet connectivity. We believe Amazon has placed itself in an enviable position, as eCommerce continues to grow.

Many of our themes, including eCommerce, video games, social media, online dating and digital trends in music, are in the mist of multi-year trends of increasing adoption and engagement.

We believe, this Black Friday falls in the middle of a 20-year revolution in consumer behaviour, driven by increased connectivity. At the same time, the pandemic has accelerated the trend toward digital and has triggered changes in consumer behaviour that are likely going to have lasting effects. In our view, it therefore continues to be a compelling time to invest in the consumer sector to capture alpha.

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Sources

  • 1 Source: Adobe Analytics as at 31 December 2019.

    2 Source: Amazon as at 15 October 2020.

    3 Source: eMarketer.

    4 Source: Amazon as at 29 October 2020.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important Information

  • The opinions referenced above are those of the author as of November 2020, unless stated otherwise.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.