The pandemic has changed many things, but perhaps not more than our shopping habits, leading some to predict that the rise of e-commerce will kill physical stores for good.
However, new research in the the wall street journal shows that these predictions were premature, as consumers are now returning to physical purchases in the United States as the pandemic subsides following the rollout of vaccines.
Amazon, Stripe, PayPal, Shopify and many other e-commerce companies have seen their revenues and profits soar during the pandemic, due to social distancing, store closures and the wider decline of the main street .
In the second quarter of 2020, just when the pandemic restrictions were in place, U.S. retail’s share of e-commerce grew to 15.7%, according to Census Bureau data. But by the fourth quarter of 2021, that share had fallen to 12.9%.
“We’ve had over 100 years as a society of going to a store to buy something,” said Bernstein Research analyst Mark Shmulik. WSJ. “That muscle memory doesn’t turn off just because you were forced to buy things online a few times during a pandemic.”
Rise of the e-commerce giants
The pandemic has been devastating to large swaths of society and to many, many businesses, especially those that dealt exclusively with face-to-face services.
But for a group of Internet companies that provide e-commerce services or sell products online, things were going great.
Amazon, the largest of the group, has seen profits and revenue soar, from an already staggering base. According to Amazon CEO Andy Jassy, the company “achieved three years’ worth of planned growth in about 15 months.”
Amazon’s 2020 shopping season, which was beset by lockdown rules, saw seller sales increase 60% year-over-year to $4.8 billion globally in a weekend.
A return to earth
Another way to look at the Census Bureau data is to go back to the overall trend line, which sees e-commerce gradually taking a bigger and bigger share of physical retail.
U.S. e-commerce figures for the fourth quarter of 2021 are released today. Penetration is now back on the trendline. pic.twitter.com/xUr8c2AND5February 18, 2022
Different lock, different impact. The UK advanced 5 years while the US is back on the trendline. pic.twitter.com/NoQiFSpbSJFebruary 18, 2022
Another interesting way to look at the data is that the United States, which had some of the loosest restrictions in the world, especially until 2021, made it easier to return to physical retail than elsewhere, as the United Kingdom.
So while physical shopping is making a comeback – likely as people revert to old habits – in the long run, e-commerce will likely win out for many purchases.
The pandemic, it seems, has shown us a glimpse of the future of retail.