At every level of e-commerce readiness, organizations worldwide grabbed a tight hold of the digital lifeline to stay afloat: report
As pandemic lockdowns and infection control rules kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online.
Now, data is showing that e-commerce made up roughly $1 out of every $5 spent on retail, up from about $1 out of every $7 spent in 2019. According to Mastercard’s latest report, this amounted to an additional US$900bn being spent in retail online around the world in 2020.
For retailers, restaurants and other businesses large and small, being able to sell online has provided a much-needed lifeline as in-person consumer spending was disrupted.
Five key trends discerned
The report draws on anonymized and aggregated sales activity in the Mastercard network and proprietary analysis by the Mastercard Economics Institute, which in turn modeled global retail e-commerce across all payment types to determine the additional retail e-commerce spending based on deviations from the trend.
The report uncovered several key trends among the data gathered:
- Early digital adopters went into overdrive: Economies that were more digital before the crisis saw larger gains in the domestic shift to digital that look more permanent than the countries that had a smaller share of e-commerce before the crisis. As far as the parochial data indicates, the Asia Pacific region, North America, and Europe were strongest in driving e-commerce adoption.
- Grocery and discount-store digital gains look sticky: Essential retail sectors, which had the smallest digital share before the crisis, saw some of the biggest gains as consumers adapted. With new consumer habits forming and given the low pre-pandemic user base, 70 – 80% of the grocery e-commerce surge are projected to become the new benchmark.
- International e-commerce rose 25–30% during the pandemic: The boost in both sales volume and the number of different countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25%–30% year on year from March 2020 through February 2021.
- Consumers increased their e-commerce footprints: Buying from up to 30% more online retailers, e-consumers had expanded choices in terms of having a greater number of websites and online marketplaces to choose from than before. Residents in countries like Italy and Saudi Arabia were buying from 33% more online stores, on average, followed closely by Russia and the UK.
- Shift to electronic payments accelerated in the USA: Even in store, the pandemic measures accelerated the transition to digital—with more consumers moving from plunking down cash to using touch-free payment solutions. The data gathered showed that non-cash payments had jumped by an additional 2.5% beyond the ongoing trend. This led to an acceleration of the shift from cash to electronic payments by a full year.
According to Bricklin Dwyer, Chief Economist and head of the Mastercard Economics Institute: “While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce. Countries and companies that have prioritized digital continue to reap the benefits. Our analysis shows that even the smallest businesses saw gains when they shifted to digital.”
Dwyer’s data indicate that roughly 20% to 30% of the global shifts to digital will be permanent.