The Adobe Digital Economy Project studies the relative value of the online shopping dollar in a supplement to the regular update of the Digital Price Index.

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Adobe Digital Economy Project
Digital Dollar Analysis | August 2017

2. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.
Background
 For several months, the Adobe Digital Economy Project’s Digital Price Index (DPI) has
released two indexes of topline inflation numbers in the monthly update: an index of total
inflation (containing all retail, travel, and grocery categories) and one index less groceries (all
categories except groceries)
 The topline figures are produced by using the spending habits of the average household as
measured by the Bureau of Labor Statistics (BLS) Consumer Price Index (CPI). The BLS
surveys households once a year and does not make a distinction between online and offline
shopping
 However, consumers buy different things in different quantities online than in their broader
shopping experience. The new headline digital inflation number now reflects online inflation
rates applied to the mix of products people purchase online. The DPI can now be used to
calculate inflation for online purchases and compare that to inflation in the broader economy
(as measured by the CPI)
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Findings
 Across categories measured by both the CPI and the DPI, deflation is occurring across several key
consumer categories. As the DPI has consistently shown, deflation is occurring faster online than in the
broader economy in many of these categories
 This means that consumers shopping exclusively online for particular kinds of products are
experiencing more deflation than their offline counterparts, which makes the relative value of
spending online higher than in the larger marketplace. The online dollar tends to go farther over time
due to deflation
 Over the past two years, since July 2015, the purchasing power of the online dollar in retail has risen to
$1.06, compared to $1.03 for a dollar spent in the same categories in the larger economy
 That difference might seem small, but savings from prices declining online can make a difference over
the course of a year or more. By taking advantage of declining online prices, savvy shoppers can save
$275 (vs just $150 for offline shoppers) in June 2017 for a sample basket of the fastest-declining
products (see slide 5)
 Over the long run, this can really add up. If online shoppers in the U.S. took all of their spending in 2016
and moved it offline, they would lose out on approximately $2.2 billion in savings from online
deflation a year later
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Online deflation is faster than total spending for comparable categories,
leading to savings online
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$1.06
$1.03
$0.99
$1.00
$1.01
$1.02
$1.03
$1.04
$1.05
$1.06
Value of a Dollar (Retail), July 2015 - July 2017
Digital Dollar Offline Dollar
Note: dollar values indexed to July 2015 (July 2015 = $1.00)

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Digital dollars go further: savings on a sample basket online vs. general
deflation
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$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
Digital Savings Offline Savings
Savings in June 2017 from Deflation vs June 2016
Apparel Furniture and Bedding Personal care products
Sporting Goods Jewelry Televisions
$273.67
$148.36
Category Spend
Digital
Deflation
Year-over-
year
Offline
inflation
year-over-
year
Savings From
Digital Deflation
Savings From
Offline Deflation
Apparel $1,200 -4.1% -0.6% $49.06 $7.67
Furniture and Bedding $1,000 -4.3% -0.8% $43.20 $8.20
Personal care products $300 -0.9% -0.6% $2.68 $1.81
Sporting Goods $400 -5.6% -2.0% $22.35 $7.95
Jewelry $600 -4.1% 1.5% $24.41 $9.23
Televisions $1,000 -13.2% -11.4% $131.97 $113.52
Total $4,500 $273.67 $148.36
Note: the above sample spending basket reflects categories where online deflation was highest relative to
spending in the broader economy. This basket is not exhaustive of categories in the DEP or Digital Dollar
analysis or of online spending in general.

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Methodology Notes
 Adobe Digital Insights (ADI) developed online spending weights by analyzing data from Adobe Analytics as well
as data from Forrester and eMarketer
 Adobe Analytics data contains price estimates for shopping categories across approximately 70% of online
spending in the U.S. Approximately 30% of online spending occurs in categories that the DPI doesn’t have pricing
information for, so those categories are left out of the analysis
 The categories included in the Digital Dollar analysis include apparel, appliances, auto parts, computers, furniture &
bedding, groceries, jewelry, medical equipment and supplies, nonprescription drugs, personal care products, pet
products, tools & home improvement, televisions, and toys
 July data are used in the Digital Dollar analysis because July 2017 is the latest month for which data from the CPI
are available
 The relative value in the Digital Dollar analysis is calculated by dividing cumulative inflation by $1.00. Higher or
faster levels of deflation lead to higher relative values, or purchasing power, of an indexed dollar
 For the complete methodology on the Adobe Digital Economy Project, please reference our latest monthly
update
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