Consumers around the world spent $ 900 billion more at online retailers in 2020 compared to the previous two-year trend, according to a report released Tuesday by the Mastercard Economics Institute.
Shoppers go back to restaurants and return to stores to personally purchase clothes and shoes. Still, they will continue to stock up on their fridges and look for good deals online – a sticky habit developed during the pandemic, the report said.
Online sales of nearly every retailer surged as shoppers lingered at home. While consumers were picking up online purchases from the parking lot and getting parcels or takeout meals delivered to their doorstep, e-commerce made up about $ 1 in every $ 5 spent on retail worldwide. That’s an increase of about $ 1 for every $ 7 spent in 2019, the report said.
In an interview on CNBC’s Worldwide Exchange with Frank Holland, Mastercard chief economist Bricklin Dwyer said that about 20% to 30% of the $ 900 billion in additional digital spending will continue through 2021 and years to come.
However, the long-term benefits of ecommerce will be uneven and will depend on what a retailer is selling, how he has adapted his business model, and how consumers prefer to shop. For some merchandise, such as clothing, shoppers may prefer to go back to brick-and-mortar stores where they can try on an outfit before purchasing it. In certain retail categories, such as electronics, online purchases already accounted for a higher proportion of total sales, so there was less room for growth.
Supermarkets and discount stores will see the most dramatic and lasting shift to e-commerce, according to the report. Discount stores include dollar stores, wholesale clubs, and other retailers that sell to customers at wholesale prices. Grocers are likely to keep about 70% to 80% of the digital sales profits they saw during the pandemic’s peak, and discount stores will keep about 40% to 50% of that, the report said.
For both sectors, online sales accounted for only a single digit share of total pre-pandemic sales, creating an opportunity for more noticeable growth.
However, clothing stores, restaurants, and sports / toy stores saw the largest initial spike during the pandemic, only retaining 10% to 20% of that spike in sales, according to the report.
Electronics and department stores had the highest penetration of online sales before the pandemic, with e-commerce making up about 55% to 60% and 40% to 50% of their total sales, respectively, according to Mastercard. For the two sectors, their expected permanent shift will be about 20% to 30% of their peak jumps.
Dwyer said grocers face unique hurdles – even as more consumers shop online for produce, meat and other ingredients. Only about 10% of total food spending is done through e-commerce, he said.
“You have to trust someone else to pick your peaches,” he said. “You have to be able to trust that someone else can deliver you goods and still have them in good condition when they arrive. So those are really some of the barriers we are going through.”