E-commerce in the US is approaching a major milestone: In 2022, it will record its first trillion-dollar year, predicts Adobe Analytics, which analyzes online transactions across millions of products.
The pandemic is speeding US online sales to new heights far faster than they would have moved otherwise. Adobe estimates Covid-19 boosted the country’s e-commerce spending by 20%, or about $183 billion. While some of that activity is likely to return to stores once life gets back to normal, experts expect many of the new behaviors shoppers picked up out of necessity will stick around. Retailers have to adapt, or they risk losing customers to better-prepared competition.
Several product categories are still seeing elevated online sales. Adobe notes that growth in online grocery shopping has continued, with sales between Feb. 1 and Feb. 21 this year up 230% compared to the period from Jan. 6 to Jan. 26 last year, before Covid-19 began its spread across the US. The surge in sales of sporting goods online has persisted too, growing 75%.
Shoppers have also found they like the option of buying online and picking up in store. In February, this method of shopping grew 67% versus last year, according to Adobe, and in a survey of more than 1,000 US consumers found 30% preferred curbside or in-store pickup to standard delivery.
Retailers who aren’t thinking digitally risk losing relevance
Amazon, which has thrived through the pandemic, and other online retailers are likely to gobble up a share of those rising digital sales. But the great majority of US retail sales still happen in stores, and companies with brick-and-mortar shops will probably need to consider how they’re integrated with their online businesses.
In a recent report outlining seven imperatives for the retail industry, the consultancy McKinsey warned that shoppers “will choose retailers based on ease and richness of end-to-end experience.” Yet most retailers base decisions about their stores on their brick-and-mortar performance, it said, rather than considering them as one part of a whole shopping ecosystem. Many shoppers, for example, will find products online and then go to a store to see and purchase them, so retailers can benefit from letting them search nearby stores to see if the products are available. McKinsey advised companies to make sure they’re upgrading their e-commerce capabilities and rethinking how their stores function as they take on new roles, such as serving as fulfillment hubs for online orders.
Some of retail’s recognized leaders, from big-box chain Target to sports companies Nike and Adidas, have been doing just this, investing heavily in their digital businesses and rethinking how they can offer customers one seamless experience.
Adobe forecasts US e-commerce will reach between $850 billion and $930 billion in sales this year. Companies will all be vying for a slice, but those that don’t think of stores and e-commerce as separate businesses could walk away with the bigger piece.