The rise and fall of eCommerce – and where to next…
Over the past few years, eCommerce has had its moment in the sun. In Australia alone we have seen eCommerce sales balloon from $27.5bn in 2019 to $50.46bn in 2021. As the world has found a way to start to live with the virus, the eCommerce freight train seems to have started to slow, but is it all doom and gloom? In late July, Shopify stood down 1,000 employees (10% of its workforce) with the CEO citing that Shopify made a wrong bet on where the future of eCommerce spending was going amid COVID-19. If Shopify’s layoffs are anything to go by, the many sceptics of digital and eCommerce can breathe a sigh of relief, but is it as dire as it looks?
Will eCommerce sales kick back to pre-covid levels?
Whilst Shopify made a fatal assumption of where the market was headed – that doesn’t mean that eCommerce is about to fall off a cliff. A number of key indicators demonstrate that we are entering a new phase of eCommerce – one of which is far more normalised.
Growth still on the horizon
In 2022, retail eCommerce sales were anticipated to reach ~$5 trillion for the first time and by 2025 global eCommerce sales are anticipated to reach $7.39bn. Whilst growth is still occurring, it isn’t at the same levels we experienced over the past few years and for good reason. Whilst online affords a level of convenience and choice that is unrivalled, many consumers still enjoy the physical shopping experience and therefore belief that eCommerce growth wouldn’t, at some point, normalise - was a fallacy.
Even Amazon hasn’t been spared from the flatlining of eCommerce growth, with online sales declining 4% year over year for Q2, as many shoppers have returned to physical stores. However, Amazon is still forecasting strong growth in the months ahead, with the juggernaut expecting sales to come in between $125 billion and $130 billion, representing growth of 13% to 17% in the latest quarter.
The way consumers want to shop has permanently changed
Whilst the allure of physical stores is beckoning consumers back, many consumers believe their shopping behaviours have been altered for good. In a recent study by Signifyd, 55% of consumers said they considered the shopping changes they made to cope with COVID conditions, as permanent. In addition, the same study found 1 in 4 consumers are shopping considerably more online than they did pre-pandemic and a further 31% said they are somewhat spending more than they did pre-pandemic. Its behaviours like these that resulted in Q1 US eCommerce sales to outperform the first quarter of 2020 by 125%. Whether it be convenience, the preference to shop contactless or more choice – the distinct set of benefits that come with online shopping, still make it a compelling proposition for many.
More real experiences and greater convenience will fuel the next wave of growth
Whilst eCommerce has grown demonstrably, future growth is set to be fuelled by the next wave of innovation that promises to remove some of the historical barriers that have impacted consumer trust to buy online. Live commerce is one of several trends emerging in the eCommerce space that enables consumers to gain a more real life, up-close presentation of products. In China alone live commerce is expected to surpass $400bn this year, although in developed economies, like the US, it is still in its infancy but growing fast. Coresight Research forecasts that the value of goods sold via live shopping streams in the US, could reach almost $70bn by 2026 — representing about 5 per cent of all online shopping — up from $20bn this year. With extended reality also promising to deliver real world shopping experiences and quick commerce also gaining momentum, the future is very bright for eCommerce.