The Rise of Ecommerce During the Pandemic

Our everyday lives shifted suddenly in early 2020 as a result of the Covid-19 pandemic. For many, this entailed working from home, but also having groceries, various home goods and entertainment options delivered. As a result, retail experienced a distinct change over the past two years: Brick-and-mortar operations, due to restrictions, took a hit, while demand for ecommerce soared.

Understand the factors behind this trend, and what could be in store for the future:

Ecommerce Growth During the Pandemic

Trends in the U.S.

The U.S. Census Bureau’s Annual Retail Trade Survey called attention to a visible change from 2019 into 2020: Ecommerce sales grew 43 percent over that period, from $571.2 billion in 2019 to $815.4 billion in 2020. Behind these numbers were the following trends:

·         The first year of the pandemic saw many individuals living, working, studying and shopping from home.

·         Industries depending on commuters and in-store sales saw a decline during these years, particularly gasoline and new clothing and accessories.

Building off these points, a report from Adobe Analytics examined spending habits in the U.S. over the past two years. Across all industries and sectors, Americans in total spent $1.7 trillion during this period. Online sales saw 55-percent growth and are predicted to reach $1 trillion for 2022.

Beyond what we typically associate with ecommerce, the pandemic required businesses of all sizes and types to suddenly adapt to the digital-first economy. With more Americans staying at home, online sales around groceries, clothing and electronics shot up and have composed over 40 percent of all digital consumer transactions during the past two years. Further fueling this growth has been buy now, pay later models, which began to experience greater adoption toward the end of 2020.

These sectors are predicted to continue expanding, even as pandemic-related restrictions lessen. In the U.S., digital sales for electronics are expected to reach $174 billion for 2022. Grocery sales from online platforms, meanwhile, doubled from 2019 to 2020 and are predicted to hit $85 billion in 2022, up from $79.2 billion in 2021. These shifts will help drive ecommerce’s pace in the U.S., which could see sales increase from $126 billion in 2021 to $130 billion in 2022.

Data from Digital Commerce 360 examined the impact of the pandemic on ecommerce in the United States: Sudden lifestyle changes likely contributed $218.53 billion to the industry, with 2021 ($116.45 billion) building off 2020 ($102.08 billion). 2021 specifically saw Americans spend $870.78 billion total through online merchants. Without these changes, growth likely wouldn’t have been as sudden: Without the pandemic, ecommerce sales may have just passed $750 billion.

Ecommerce Growth at the Global Level

Considering ecommerce on a global scale, the International Trade Administration found that 44 percent of ecommerce purchases came from websites and 47 percent from marketplaces. While the U.S. experienced visible growth, Brazil, Japan and Spain saw more businesses adopting a digital-first model to stay afloat. Collectively, these shifts saw ecommerce revenue increase 19 percent from 2019 through the end of 2020, with food and personal care products being the primary driving force and more B2B operations adopting a digital-based model.

Changes in Retail Overall

Reflecting these changes, the EY Future Consumer Index found that many businesses had to adapt far more rapidly than expected to remain competitive and keep customers engaged during the early months of the pandemic, particularly as 60 percent of consumers claim to shop at brick-and-mortar stores less frequently than they did before March 2020. Along with investing more seriously in ecommerce, this attention resulted in the emergence of ghost kitchens and, for retail, buy online, pick up in store arrangements.

Ecommerce After the Pandemic

Despite loosening restrictions in the U.S. and other parts of the world, ecommerce is predicted to continue its forward path: The International Trade Administration estimates an eight percent global increase through 2024.

Long term, this trend may mean:

·         Delivery, particularly for groceries, electronics, clothing and home goods, won’t go away, and businesses ought to factor this demand into their model.

·         In-person shopping is no longer just about convenience. Rather, consumers want to continue buying online and picking up their order in stores, and frequently expect these locations to essentially function as fulfillment centers. As well, brick-and-mortar retail needs to offer more of a lifestyle experience.

·         Small businesses can access a larger pool of customers. This can help such entities stay afloat even as consumes move away from urban centers to find more affordable housing.

·         Despite sharp inflation and global conflict into 2022 and a recession predicted in the near future, Adobe Analytics found that consumers continue to shop online at the same rate despite paying more for goods.

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