August 2020 Ecommerce Trend Analysis for Decision Makers

Newel Cobb

August 5, 2020

What a month it's been for ecommerce. In the ever-changing landscape of the "new normal" since COVID-19, our monthly blog is designed to help ecommerce decision makers stay in the know of the most important and impactful ecommerce trends.

Ecommerce market penetration jumped forward 10 years

In our last post, we made it clear that, “in a matter of months, COVID-19 has leapt ecommerce forward by a couple of years.” Though everyone knew the market had moved forward by about 3-5 years, the actual numbers have come out and are remarkable. According to McKinsey, ecommerce market penetration jumped forward 10 years in Q1 alone!

US Ecommerce Leap Forward 10 Years | Pattern, McKinsey Analysis
Image by McKinsey

The truth is, nearly everyone in ecommerce is growing. Amazon posted second quarter earnings that blew out Wall Street estimates. Walmart marketplace has surpassed 50,000 sellers, doubling in size from July 2019. eBay reported a 26% GMV growth for the second quarter—the highest quarterly growth rate in 15 years. Shopify’s GMV outpaced eBay.

CNN put it best when they said, “Our pandemic shopping habits are here to stay.” For years, many companies have lacked the necessary focus on ecommerce because of its P&L share. That will change. The companies that invest in ecommerce will likely gain the greatest market growth.

More people are shopping online, and how they shop is evolving

As more people shop online, the old playbooks are changing. More and more customers are looking for consumables (products you buy more than once like hand sanitizer) over durables (one-time purchases like Apple Airpods). Below you can see how these search trends have changed on Amazon by rank over the course of a year.

Pattern Graph of Ecommerce Trends | Pattern
Image and data by Pattern

Amazon is not the only place where shopping habits are evolving. Though Amazon is growing in sales, they are losing search traffic market share to other ecommerce platforms. Amazon share is down from 52% in January to 47% in June.

Amazon Marketshare Down | Pattern Trends
Image by MarketplacePulse

We are seeing dotcom traffic share spikes for sites like Home Depot, Lowe’s, Macy’s, and others. This does not mean you need to hit the brakes on your Amazon account. It is common for industry leaders to lose market share as the market grows. We suggest you simply hit the gas on every other market by diversifying across ecommerce. More people are shopping online, and how they shop is evolving.

Habit changes are not only changing how we shop or where we shop, but also what we shop for. Some of these increases can be expected, like cleaning tools or masks, but others are a little less intuitive. For example, Kellogg raised its annual sales and profit forecast Thursday, anticipating higher profits from people eating more cereal at home during the pandemic and related shutdowns.

Ask yourself, “How has my shopping habits changed during the pandemic?” Look through your assortment; if you see any positive changes, lean into them.

Brick and mortar is getting hit hard, including Amazon, but many are adapting

Brick and mortar locations may forever be changed. Mall owners across the country are filing for bankruptcy, rent costs are free falling in some of America’s glitziest shopping districts, and over 6,000 brick and mortar stores will be closing/closed in 2020. The list of casualties include the following:

  • Tailored Brands (Men's Wearhouse, Jos. A. Bank): 500 stores
  • Tailored Brands (Men's Wearhouse, Jos. A. Bank): 500 stores
  • Pier 1 Imports: 450 stores
  • GameStop: 320 stores
  • Signet Jewelers (Kay Jewelers & others): 300 stores
  • GNC: 248 stores
  • Victoria's Secret: 238 stores
  • Gap: 230 stores
  • Tuesday Morning: 230 stores
  • Walgreens: 200 stores
  • Forever 21: 178 stores
  • PVH Corp (Calvin Klein): 162 stores
  • JCPenney: 155 stores
  • A.C. Moore: 145 stores
  • Macy's: 125 stores
  • Microsoft: 83 stores
  • Sears: 51 stores
  • Brooks Brothers: 51 stores
  • Bath & Body Works: 50 stores
  • Kmart: 45 stores
  • Bed, Bath & Beyond: 44 stores
  • Neiman Marcus: 20 stores
  • Nordstrom: 19 stores
  • Hallmark: 16 stores

Brick and mortar is getting hit hard, but many, including Amazon, are adapting. There has been a major omni-channel play by Amazon. Amazon recently announced that they would be commercializing their “just walk out” Amazon Go technology. This technology uses phone-location, cameras, and RFID technology to allow a customer to simply walk in, put an item in their cart, and walk out without checking out physically. Amazon has also developed similar shopping cart-based technology that is able to be used in existing stores without the camera installations necessary for Amazon Go.

In the UK, Amazon is looking at opening 20+ convenience stores. In Philadelphia, they are looking at piloting a brick and mortar expansion. Amazon is getting serious about the brick and mortar omnichannel play.

Amazon is not the only retailer looking at expanding their omnichannel. Kroger is building a DC Metro distribution center despite not having any nearby physical stores. Bill Bennet, the head of ecommerce at Kroger, recently stated that “[Kroger is] building some amazing, industry-leading stuff, including our Ocado sheds opening soon, Nuro delivery tests in flight, and our incredible grocery pickup/delivery capabilities bringing Fresh for Everyone.”

Look at your ecommerce sales through the lens of the total market. As your brick and mortar partners close their doors, those customers do not disappear. Ecommerce is the likeliest place for you to make up in terms of growth.

Walmart is changing their game for the omnichannel experience.

Walmart is also optimizing their omnichannel play. After a move early this year to have ecommerce buyers report through the store organization, Walmart brought hundreds of ecommerce jobs back to their corporate HQ in Bentonville, Arkansas. Many of these associates were dotcom buyers who will now be managing as omnichannel associate buyers.

In addition to these omnichannel changes, Walmart seemed to officially launched Walmart+. For under a hundred dollars a year, Walmart will offer same day delivery on a wide assortment, including grocery. Walmart has delayed the launch more than once, and further tested the program across a number of specific regions. Some report that the actual implementation may still be delayed.

To further improve their omnichannel coordination with vendors, Walmart has created a one stop advertising dashboard said to rival Amazon. The tool should allow vendors to see if their online advertising leads to instore purchases. Walmart is changing their game for the omnichannel experience.

Walmart dotcom has largely been ignored because of its size compared to Amazon and Walmart stores. By viewing Walmart as an omnichannel, you will be able to experience the most YoY growth.

Amazon is making changes in prep for holiday 2020, some good, and some hard to work with

Like Walmart, Amazon has also improved their advertising dashboard, adding ROAS to its metrics. This will allow advertisers to move away from the Amazon favored ACoS to better measure return on ad spend.

Amazon now measuring ROAS | Pattern

This may be some of the only good news coming out of Amazon. To prevent a second wave of shipping restrictions, Amazon has created SKU level shipping restrictions across several categories. Starting at 200 per seller per unit, Amazon is limiting assortment in prep for holiday. Limitations are based on forecasted demand. Amazon says they will open up the restrictions come holiday. We recommend being ready to send in most of your inventory once the doors open. These will not be the last inventory restrictions we see this year.

Jeff Bezos digitally appears before congress to address antitrust allegations

Much can be said about Bezos’ testimony to congress. Jeff Bezos put out an 8 page written statement where he shared some of the following insights.

“Who do Americans trust more than Amazon ‘to do the right thing?’ Only their primary physicians and the military, according to a January 2020 Morning Consult survey,” he said.

“Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners. For example, more than 80 retailers in the U.S. alone earn over $1 billion in sales.”

“There are now 1.7 million small and medium-sized businesses around the world selling in Amazon’s stores. More than 200,000 entrepreneurs worldwide surpassed $100,000 in sales in our stores in 2019. On top of that, we estimate that third-party businesses selling in Amazon’s stores have created over 2.2 million new jobs around the world.”

Despite the statement, Bezos was grilled on how they use their sellers’ data. Days later, states like New York announce they are looking at investigating Amazon.

This will likely not be the last time we hear about Amazon being questioned by law makers. We will keep an ear to the ground if there are changes that could affect selling on Amazon.

All in all, retail is changing daily, especially in the new climate since a global pandemic. Come here the first Wednesday of each month to keep up with our Pattern Forecast and stay in the loop. To learn more about what Pattern does, contact us below or subscribe to our biweekly Insights newsletter.

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Global Ecommerce: Weekly News (6th September 2022)
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Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)

Global Ecommerce: Weekly News (30th August 2022)
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Global Ecommerce Weekly News: 30th August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon set to shut down Amazon Care Amazon is closing its telehealth service, Amazon Care, which launched in 2019 as a trial program for its headquartered employees. Later the service was rolled out nationwide for employees and other companies. The ecommerce giant has now made the decision to move away from the healthcare space, believing it was not the right long-term solution for its enterprise customers. [Read more on CNBC](https://www.cnbc.com/2022/08/24/amazon-is-shutting-down-amazon-care-telehealth-service.html) Peloton closes new deal to sell on Amazon Following a recent deal, Amazon customers will soon be able to buy Peloton fitness equipment on the marketplace, marking Peleton’s first move outside a direct-to-consumer model. According to Peloton’s CCO, there are already around half a million searches on Amazon for Peloton products every month, despite having no presence on the marketplace. Some key products include the original Peloton Bike, retailing for $1,445 and Peloton Guide for $295. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/24/peloton-strikes-deal-to-sell-fitness-equipment-on-amazon/) --- Other Marketplace News --- 60% of Malaysians are buying from local sellers on Shopee A recent survey of nearly 3,500 respondents found that nearly half of the shoppers prefer to purchase from local sellers due to shorter delivery times. Other shoppers decide to shop locally due to the quality of the products made in Malaysia and an interest in keeping the economy running. As a result, smaller local merchants have been able to grow their businesses, and shoppers benefit from shorter delivery times, products of high quality and supporting local businesses. [Read more on The Malaysian Reserve](https://themalaysianreserve.com/2022/08/25/around-60-malaysians-are-buying-from-local-sellers-on-shopee/) Flipkart’s social commerce platform Shopsy crosses 100 million users Flipkart launched a social commerce arm, Shopsy, in July of last year, which has now surpassed 100 million users, ahead of its target timeline being the end of 2022. This acquisition of new users has made Shopsy one of the largest platforms of its kind in the country, and is expected to onboard a further 100 million by the end of 2023. The platform is centred around boosting local entrepreneurship and powering ecommerce for consumers across tier 2+ regions where users face challenges around trust and navigation when shopping online. [Read more on Business Standard](https://www.business-standard.com/article/companies/flipkart-s-social-commerce-platform-shopsy-hits-100-million-users-1220828006851.html) Meta joins Amazon and Walmart in bid for Indian ecommerce market Amazon mentioned earlier in the year that it would be building a logistics division in-house through its purchase of a 51% stake in Ecom Express, an end-to-end logistics firm, to make ecommerce deliveries more efficient in the country. Walmart operates Flipkart in India and is set to continue its investment in the marketplace. In an effort to compete in the Indian ecommerce market, Meta has partnered with Indian ecommerce company, JioMart, to offer customers a grocery shopping platform within its WhatsApp chat feature. [Read more on Pymnts](https://www.pymnts.com/news/retail/2022/meta-joins-amazon-walmart-indian-ecommerce-market/) --- Other Ecommerce News --- Ecommerce in Spain worth €57.7 billion in 2021 Spanish ecommerce saw 11.7% growth compared to last year, largely attributed to cross-border sales. In the final quarter of 2021, ecommerce sales in Spain were at €16.9 billion euros, at least 60% of which came from cross-border sales. Transactions from foreign locations to Spain generated a turnover of €1.56 billion in Q4, a growth of 27.7% compared to Q4 a year before. [Read more on Ecommerce News](https://ecommercenews.eu/ecommerce-in-spain-was-worth-e57-7-billion-in-2021/)

Global Ecommerce: Weekly News (23rd August 2022)
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Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)