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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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Powering The $1 Trillion Black Friday Shopping Spree

The famous trifecta of American holidays is already knocking at the door: Thanksgiving, Black Friday and Cyber Monday. It forebodes a massive amount of food, but it also forebodes a massive amount of online shopping and the digital hunt for holiday deals. 

Deloitte has predicted that holiday sales this year could climb 5 percent and exceed $1.1 trillion. The e-commerce sector is expected to enjoy another bumper year, with digital sales expected to clock in at $144B-$148B, good for 14-18% growth compared to 11.2% last year. 

Meanwhile, shoppers are not all that jazzed about lining up for hours in retail stores, jostling with other sweaty shoppers or throwing down with someone over the last doorbuster. Instead, shoppers are planning to spend 59% of their 2019 holiday budgets online vs. 36% in brick-and-mortar stores.

So, what will all this shopping translate into in terms of our internet usage? Specifically, how many barrels of oil will the planet need to burn to power the deluge of data moving between data centers and user devices on Thanksgiving, Black Friday, and Cyber Monday?

Growing Digital Storm

Source: Statista

The internet is growing so big and so fast that its scale is already awe-inspiring.

It’s estimated that there are 4.4 billion internet users across the globe with the figure expected to reach 4.7 billion in another two years. Yet, it’s the sheer amount of data that flows through the so-called cyber network that’s hard to wrap your head around.  Related: Why OPEC Should Worry About Russia’s Latest Oilfield

A few years ago, Cisco predicted that the world would enter the ‘Zettabyte era’ in 2016 and double internet traffic over the next three years. Turns out the networking giant was right on the money: Statista estimates global internet traffic at 186,453 Petabytes per month, which works out to 2.2 Zettabytes or 2.2 trillion Gigabytes per year.

That’s a mind-boggling amount of data.

However, it’s almost certain that the data usage still goes up considerably during the holiday season; what with all that online shopping, watching videos and binging on Netflix. Last year, J. Crew, Walmart, Lululemon, Ultra Beauty and Lowe’s all suffered an internet retailer’s worst nightmare after their websites crashed on Black Friday with holiday sales in full swing.

To get an idea of how the holiday traffic compares to other days, we can look at holiday sales vs. normal day sales.

Statista comes to the rescue once again, with estimates that people spend $996,956 online every minute. That works out to $1.44 billion every single day.

Source: Statista

While that sounds like a whole lot of cash to spend online over the course of just 24 hours, it still pales in comparison with what people spend on Black Friday and the holiday season in general.

Last year, shoppers spent $6.2B online on Black Friday (23.6% growth); $3.7B on Thanksgiving (28% growth) and a staggering $7.9B on Cyber Monday, the highest one-day tab of all time.

In other words, people spent 4.3x online on Black Friday as they do on normal days. If this year’s Black Friday sales grow at the midpoint of Deloitte’s estimates, then that figure is likely to grow to ~5x.

While that heightened spend is partly due to bigger shopping baskets during the holidays, it’s likely due in large part to more people shopping online as evidenced by rampant website failures as well as this claim by Bob Buffone, CTO at Yottaa, a web-optimization software company:  Related: 99 Oil Rigs Gone And Counting: Rig Count Falls Again

"If you have not load tested your site at five times normal traffic volumes, your site will probably fail." 

In a past article, we surmised that it takes approximately 55,432,000 barrels of oil per year to power the internet. If we use online shopping activity as a rough proxy of overall internet activity during Black Friday, then we can surmise that we will need 759,342 barrels of oil to power the Internet on Black Friday.

But as we have seen above, Thanksgiving and Cyber Monday are no slackers either. Using the same logic used here for Black Friday, we will require a grand total of 2.2 million barrels of oil to power the internet on Thanksgiving, Black Friday and Cyber Monday.

That’s nearly a fifth of daily oil output by the United States, the world’s largest producer.

Again, it’s important to bear in mind that these figures are only rough estimates since online shopping does not consume as much data as watching videos and Netflix and also because a 5x increase in e-commerce traffic does not necessarily translate into a corresponding increase for other forms of traffic.

By Alex Kimani for Oilprice.com

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