How COVID-19 Catapulted Ecommerce 10 Years Into the Future: What Now?

Newel Cobb

August 31, 2020

If businesses weren’t at least dipping their toes in the world of ecommerce pre-2020, COVID-19 has proven they are dangerously behind the times. Offline the effects of the pandemic have been devastating for many brands. Business Insider reported in August 2020 that more than 6,300 brick and mortar stores will be closing in 2020, including Pier 1 Imports (450 stores), Walgreens (200 stores), and Tailored Brands (500 stores). Brick and mortar retailers across the country are facing bankruptcy and financial uncertainty.

Online, however, there’s a different story being told.

Propelled by massive shifts in consumer behavior due to shelter-in-place and social distancing measures, ecommerce has jetpacked itself into the future, and not just by a few years, but by a decade! McKinsey reports that ecommerce market penetration jumped forward by ten years in the first quarter alone, leaving many brands to quite literally adapt or die.

These changes have revolutionized the market, and they’re also begging the question: where do we go from here? A look at the numbers can give us an idea of the ways COVID-19 is changing the future of ecommerce and if those changes will be sustainable.

How the market has changed during COVID-19

Limited by shelter-in-place orders, shoppers are purchasing products on digital and omnichannel markets in unprecedented numbers—a study by Adobe Analytics found that online spending hit $434.5 billion in July, and 2020’s online sales are expected to surpass the total online sales in 2019 by the start of October. Consumer behaviors have shifted to meet the demands of a crisis economy, and as a result, brands are shifting more attention to the digital space to meet increasing demand for online products.

Consumer behavior changes

According to a study by McKinsey, consumers across the globe have shifted their focus to essential products, like grocery and household supplies, and products with value. Many are battening down the hatches for impending financial uncertainty, so much of the shift has turned away from high-priced and luxury items. It isn’t just durable products like shoes or headphones that consumers are buying, but consumable products (products like sanitizer that you buy more than once) as well.

Something that has noticeably changed due to the COVID-19 crisis is consumer purchasing behavior among 55-74 year olds, or the baby boomer generation, who’ve been most affected by the pandemic. According to the National Retail Federation, baby boomers typically made less than half of their purchases online pre-pandemic. Two thirds now say their shopping experience has been improved by online technology, in-store, and curbside pickup. Baby boomers have also embraced delivery services. Six out of ten baby boomers say they are using services like Amazon Prime or Shipt more often because of COVID-19.

Ecommerce brand growth

Ecommerce brands have seen leaps in traffic and growth across the board during the COVID-19 crisis. According to McKinsey, most categories have seen more than 10 percent growth in their online customer base during the pandemic, and it’s translated into sales in big ways.

In July, Amazon posted second quarter earnings of $88.9 billion, blowing away its expected $81.24 billion. Walmart Marketplace has doubled its pool of sellers to over 50,000 since July 2019, and eBay reported a 26% GMV growth in its second quarter, it’s highest quarterly growth rate in 15 years.

Dotcom sites are also taking a lot of search traffic from sites like Amazon, with websites like Lowe’s, Home Depot, Macy’s, and others seeing big spikes in traffic share. Walmart, Instacart, and Target.com have won many new customers with their online grocery services, and Walmart’s much-anticipated Walmart+ could give unprecedented competition to Amazon’s Prime services in the near future.

According to a study by the Cleveland Research Company, brands expect Amazon to account for 64% of their digital business in 2021 versus 83% in 2019, showing diversification to omnichannel markets is also on the rise. According to CRC, general merchandise categories expect to see a similar concentration with Amazon in 2021, with around 65% of their digital sales flowing through the platform.

CRC found that the COVID-19 crisis has led to an enormous mix shift towards digital commerce (these findings amount to four plus years of mix shift compared to where the market was in the U.S. pre-pandemic). In April, manufacturers expected ecommerce to reach 21% of their U.S. retail sales in 2121. That number is up from 15% in 2019.

Market obstacles

The growth digital channels have seen is exciting, and it indicates that the future is very much now when it comes to ecommerce shopping, but not everyone is optimistic that this unprecedented growth will stick around for digital channels. One case study is the home furnishings retailer Wayfair.

Wayfair is a COVID-19 crisis success story in many ways: they saw their number of shoppers skyrocket during the second quarter. Wayfair revenue jumped nearly 84%, their number of delivered orders went up 106.2%, and they saw five million new customers on their site. Wayfair’s stock has more than tripled (it’s up 246%) this year to date, and Wayfair executives are confident that this trajectory is continuing upward and that new customers will continue to spend money on the site long after the pandemic ends.

Neil Sanders, managing director of GlobalData Retail, is skeptical that Wayfair’s numbers are sustainable. He attributes much of Wayfair’s online sales boom to the fact that many stores were closed during the pandemic, a reality that could slow post-pandemic online growth for thousands other brands that have seen unprecedented success online.

In an interview with MarketWatch, Saunders said, “From our data, consumers have already started to return to physical stores and online penetration levels in furniture and home furnishings have dropped from their peak in April. While we believe online sales will remain elevated in home related categories . . . the trends of this quarter will not be repeated indefinitely.”

Adobe found similar data. While online sales increased 55% year over year in July, Adobe found online sales have begun tapering off in the summer months with the reopening of many brick and mortar stores.

Saunders said that in addition to a recent drop in the number of online sales, competition is also a concern for businesses like Wayfair, especially now that so many other retailers are in the online space and loyalty shock at the start of the pandemic pushed many consumers to new retailers.

“A lot of retailers are now investing more in digital and this inevitably means that online competition in home will rise over the next few years,” Saunders said. “This will place even more pressure on Wayfair to maintain market share which possibly means higher spending on advertising and customer acquisition: the very thing that it can’t afford.”

So what does it all mean?

Ecommerce brands are excited about the success they’ve found online during the pandemic, but there’s also concern from market experts that any gains will be tempered when brick and mortar locations reopen. Regardless, consumer behavior shows that many of the changes made during COVID-19 may be here to stay.

McKinsey estimates over 60% of global consumers have changed their shopping behavior, and of the respondents surveyed in the U.S. and U.K., 73-80% intend to continue their adopted behavior.

Increased Ecommerce Adoption, McKinsey study | Pattern

Brands across the country are re-evaluating personnel, technologies, and capabilities investments to support their businesses when they emerge out of the pandemic. Having a digital presence and an omnichannel presence matters more than ever, especially in times of crisis.

While much of the future of ecommerce is uncertain, shoppers are proving to be more online than ever.

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Sept 6, 2022

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/)
Aug 30, 2022

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/)
Aug 23, 2022

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/)