The e-Commerce Season
Market Perspective 12/4
Tis the season to be shopping … online?
In 1999 e-commerce made up just 0.6% of total sales in the U.S. Probably not too surprising to you, as internet bandwidth was limited, and so were the e-commerce businesses. By 2011, twelve years later, e-commerce had grown to 5% of total sales. Seven years after that in 2018, the figure doubled to 10%. Now, in 2020, e-commerce has crossed the 15% mark. Tremendous growth in just 1.5 years. (source: fred.stlouisfed.org)
The pandemic has certainly impacted e-commerce, especially during periods of increased social distancing. While COVID-19 did not create the e-commerce trend, it has accelerated the trend already in place for years. The same could be said for trends in other areas of our economy, with examples in work-from-home capabilities, distance learning/remote education, and telehealth.
When we hear e-commerce, most may first think of Amazon. Amazon, Inc. has certainly dominated the marketplace and created what is known as the “Amazon Effect” for its disruption of physical retail locations caused by more frequent online shopping. Trends in e-commerce, however, are broader than just Amazon. Traditional brick and mortar stores saw growth in e-commerce in 2020. MN-based Target Corp., for example, reported third-quarter online sales growth that was 154% higher than Q3 2019.
The takeaway is that the coronavirus has accelerated existing trends in e-commerce. Businesses, broadly, are actively seeking ways to participate more in this trend, a trend that is unlikely to reverse, even in a post-pandemic world.
Additional Comments
Black Friday shopping updates:
Foot traffic declined by 48% compared to 2019. However, shopper yield, which measures spend per consumer, increased 36.3% (source: RetailNext)
Online spending increased 22% from a year ago, making it the second-highest online shopping day ever measured (source: Adobe Analytics)
Employment data released Friday showed job growth positive but slowing compared to recent months; the U.S. unemployment rate improved to 6.7% compared to 6.9% the prior month (source: bls.gov)
Crude oil consumption worldwide has been on the rise since bottoming mid-year; crude oil prices have been rising, now hovering near $50/barrel; a level not seen since early March (source: eia.gov)