The Pandemic Premium: Covid’s Impact Adds Billions to eCommerce
The Covid pandemic has accelerated the growth of ecommerce to a point where we, added with the effects of inflation, spent an added $32 billion on shopping for the same amount of goods online than during the past two years.
This month marks two years since the pandemic sparked lockdowns across the US, with many of us logging on to buy everything, from basics to luxuries.
The fact is that ecommerce was comfortably growing before the pandemic emerged, it just pushed it even further as more customers swapped the store for online.
In total, it is estimated that the pandemic contributed an extra $218.5 billion in ecommerce over the last two years.
This breaks down as $102.1 billion in US ecommerce during 2020 and $116.5 billion in 2021. In total, $870.8 billion was spent online in 2021, up by 14.2% from 2020’s levels of $762.7 billion.
Without the effects of the pandemic, Digital Commerce 360 estimate that ecommerce sales of $870 billion would not have been reached until 2023.
The shift in categories
Consumer demand for goods surged in 2020, with us spending money that would have gone on travel and restaurants on home repairs and furnishing.
These shifts in ecommerce behavior changed the landscape in terms of category performance. eCommerce grocery sales spiked 103% year-on-year in 2020, spending $73.7 billion. That pace was kept up during 2021, as we spent $79.2 billion on groceries.
Adobe has forecasted that the grocery category will reach $85 billion this year.
“eCommerce is being reshaped by grocery shopping, a category with minimal discounting compared to legacy categories like electronics and apparel,” said Patrick Brown, VP of growth marketing at Adobe. “It highlights a shift in the digital economy, where speed and convenience are becoming just as important as cost savings.”
Other categories that witnessed a boost in ecommerce included electronics, home improvement, and home furnishings. Consumers bought $165 billion worth of electronics during 2021, up by 8% in 2020, which was in turn up 26.8% from 2019.
The impact of inflation
One contributor to the growth of ecommerce has been inflation. According to Adobe, we paid around $30 billion more for the same amount of goods during the pandemic.
During 2020, inflated prices added $4.7 billion to the sales of ecommerce. For 2021, this figure is $22 billion. This year in January and February alone, inflation added $3.8 billion more to ecommerce sales. Inflation, however, has not prevented us spending online.
“Folks have $2 trillion more in their savings accounts now than they did pre-pandemic,” according to Wayfair CEO Niraj Shah. “So that sheer amount of money, we believe, is causing this amount of inflation to be digestible.”
When it comes to this year, we are expected to pay an extra $27 billion in ecommerce for the same amount of goods, thanks to inflation.
The pandemic has also significantly disrupted global supply chains, as warehouses sporadically close due to local breakouts and surges in demand – all of which has led to shortages and out-of-stock goods.
As one clear example, we came across 60 billion out-of-stock messages from ecommerce retailers in the two years since 2020.
So much, in fact, that we are likely to see this message on one in every 59 product pages – a whopping increase of 235% from the pre-pandemic days.
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