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The Election Has Hurt Online Retail Sales

By Daniel B. Kline – Nov 18, 2016 at 5:14AM

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Nervous consumers bought less before voting and things have not bounced back, according to new research.

President-elect Donald Trump has been critical of Amazon (AMZN 1.26%) and its CEO Jeff Bezos who has not exactly been a supporter of the incoming leader of the free world.

That has led some to think that the incoming administration could create regulatory problems for the online leader. In reality however Bezos' company -- assuming it is impacted by any broad slowdown in online sales -- has not had to wait until Trump takes office to feel some sales pain.

The election itself -- both the uncertainty leading up to Nov. 8 and the discord after Trump's shocking win -- has been a drag on online shopping. New research from Adobe Digital Insights shows that between Nov. 1 and Nov. 14 online retailers lost a significant amount of sales with growth for the period being much less than expected.

Like the president-elect, Amazon has its own planes. Image source: Amazon.

How much did the election impact online sales?

From the beginning of November through Nov. 14, Adobe found that online retailers lost out on over $800 million in expected sales. That number was not a drop in sales, but a reflection of the fact that growth was not as high as expected. The effect was felt most deeply after the election when Adobe's analysts expected growth of 7.8%, but it only came in at 1.3%.

And while the sample only involves two weeks, the change in spending habits marks the slowest growth rate for online sales Adobe has seen in the U.S. since it started tracking retail spending. In addition the company also noted another first -- shopping visits to retail sites and apps have fallen below the rate of previous years. That, Adobe said, indicates a drop in consumer confidence.

"Given the latest data, we are revising down our sales predictions for retailers. Similar to Brexit and its negative impact on consumer spending on durable goods in the U.K., U.S. consumers seem to hold off spending more online," Adobe Digital Insight Principal Analyst and Director Tamara Gaffney said in a press release. "Instead of the expected 11% year-over-year increase, we expect growth to fall to single digits this year. Sales on Thanksgiving Day and Black Friday next week will be an important indicator of how much sales expectations need to be adjusted this shopping season."

Adobe based its research on aggregated and anonymous data from 18.1 billion visits to retail websites.

What does this mean going forward?

It's hard to know -- and Adobe does not project -- whether this is a short-term trend or an ongoing problem. Clearly the election was contentious, close, and a likely distraction for consumers. The result, which was not expected by many, certainly could have created a hangover effect which will slowly wear off over time. It's also possible that the impact could linger as the nation waits to see what the new president does and how it impacts the economy.

And while Adobe does not break down the impact of this growth slowdown on any one retailer, a slowdown in online shopping likely hurts Amazon. Though it's unlikely that any uncertainty or even fear caused by the election will dramatically hurt the online leader during the holiday season, but it's worth watching whether it has any impact.

It's very likely that this drop happened due to the intensity of the election distracting the public. Now that the vote has happened, and the president-elect starts to put his administration in place at least some of the questions will go away and people will get back to shopping.

Daniel Kline has no position in any stocks mentioned. He does not own a plane, but once owned an RC helicopter he ruined in under 5 minutes. The Motley Fool recommends Adobe Systems. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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