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Online Sales Are Growing, But Not Without New Challenges

April 5, 2022


According to Reuters, U.S. consumer spending on e-commerce is estimated to reach a record $1 trillion in 2022, as a result of the switch to online shopping brought on by the COVID-19 pandemic. New research by Adobe Analytics shows that online sales totaled $1.7 trillion during the two years of the healthcare crisis. The digital economy expanded more and more as most people were forced to change their daily habits and spend their free time at home. Although forecasts for 2022 are mostly positive and online sales are estimated to grow, new challenges have already emerged.

As Russia invaded the neighboring country of Ukraine, countless people were killed, injured and forced to leave their homes. According to Bloomberg, over 10 million people in Ukraine have already left their homes—3.4 million seeking refuge abroad, and 6.5 million moving elsewhere in Ukraine. While the United Nations High Commissioner for Refugees recently said that the Russian invasion caused “the fastest moving refugee crisis since World War II”, the U.S. and other Western countries joined forces to impose economic sanctions on Russia in an effort to stop the crisis. Still, could this decision and the enduring conflict cause new problems for the global economy—and especially e-commerce?

Leaving the Russian market

After the White House announced that President Joe Biden and other G7 leaders set forth new economic sanctions against Russia and its continued assault on Ukraine, numerous companies around the world also took action to prevent escalation. More than 400 companies have already pulled out of Russia or cut operations in this transcontinental country since the beginning of the invasion on February 24, according to the Yale School of Management.

Among the companies that decided to leave Russia are some of the most famous brands in the world, like Apple, Microsoft, Visa, Mastercard, American Express, BP, and Shell. While these companies have probably invested billions of dollars in the Russian market over the last three decades, they have decided to stand for Western values and against the war in Ukraine. Likewise, many companies have not only closed their branded brick-and-mortar stores but have also suspended all e-commerce operations in Russia. Reebok is the latest brand to announce it has suspended all Russian operations, including e-commerce—and it will not be the last. 

Other issues in e-commerce

Not only are firms like Authentic Brands Group, Reebok’s parent company, closing businesses that previously required giant investments on the Russian market, but they are also facing other new issues. While Deloitte’s recent forecast remains optimistic and predicts that economic growth will continue in 2022 as the impact of COVID-19 wanes, it also emphasizes the impact that Russia’s invasion is likely to have on the U.S. economy. The crisis in Ukraine could raise energy prices and the dollar temporarily, and it could also make resources like wheat, vegetable oils, metals and chips scarce. Moreover, supply chain problems are also likely to appear for both physical and online stores.

Even so, according to the new report from Adobe Analytics, the annual online spend in the U.S. will exceed $1 trillion for the first time in 2022, boosted by groceries, electronics and apparel sales. The research goes on to show that inflation also contributes to e-commerce growth, predicting that Americans could pay as much as $27 billion more online for the same amount of goods this year. The National Retail Federation (NRF) also predicts both in-store and online sales will grow this year, thanks to growing consumer confidence, and despite risks related to inflation, the COVID-19 pandemic and new geopolitical threats like Russia’s invasion of Ukraine.

The future of e-commerce

The recent healthcare crisis changed e-commerce and numerous other industries around the world in ways that have proved to be difficult to understand in depth. While online sales were growing even before the pandemic, this global crisis probably accelerated changes in e-commerce, boosting online sales, and forever altering shopping habits in the U.S. and abroad. Although Russia’s invasion of Ukraine will undoubtedly create global unrest and growing worries—and it might even fuel inflation—confidence remains high among U.S. consumers. As the people in the U.S. are returning to their pre-pandemic normal, e-commerce will continue to grow and it could even reach a record $1 trillion this year.