2020 brought about a shift to everything digital, as the COVID-19 pandemic swept from country to country, changing shopping behaviors along the way. Online sales may have been the biggest surprise of the year, as lockdowns and social distancing rules prevented customers from visiting their favorite stores. According to Oberlo, total US e-Commerce sales reached $759.47 billion in 2020, up from just $576.53 billion in 2019. The pandemic and the crisis that followed sparked the fastest growth rate for US online sales in ten years, while also boosting the adoption of new digital tools by retailers across the country.
With vaccines being rolled out by the end of 2020, many were left wondering what will happen to e-Commerce in 2021. Q1 sales were no surprise, as many people were still unvaccinated and retailers were still struggling to adjust to the new normal. But Q2 sales delivered some surprising results. With new variants of the virus raising concerns around the world, many expected the fast-paced growth in online sales to continue. However, the rise of ecommerce slowed substantially (year-over-year) during the second quarter, as more and more people returned to brick-and-mortar stores. The obvious question everyone is asking now is what will end-of-year sales bring for US online stores?
Cause for Concern?
Online sales reached $211.70 billion in the second quarter of 2021, up just 7.6% from the first quarter of the year. On a year over year, the growth seemed moderate, up just 9.3% from $193.62 billion in the corresponding period of 2020. By comparison, e-Commerce sales surged nearly five times that rate year-over-year. Maybe even more important is the fact that US online sales totaled $437.8 billion in the first half of 2021 alone, 22.1% more than the corresponding period of last year. The rise of e-Commerce seems to have slowed significantly in Q2/2021, as customers returned to physical stores.
However, it’s important to note that spending dropped more than expected in the second quarter, primarily because the year-over-year data compares sales figures from the height of online shopping in the first year of the pandemic, with sales figures from 2021. Considering the fact that consumers were already somewhat accustomed to the “new normal” in 2021, it comes as no surprise that the growth of e-Commerce sales started to fall. Also, it’s important to consider the fact that many more people received the COVID-19 vaccine by the second quarter, which made shopping in brick-and-mortar stores more easy and secure. It remains to be seen if the decline will continue as new variants of the virus appear.
Other Factors to Consider
Although the COVID-19 pandemic remains an important factor in influencing online sales across the world, it is not the only issue to consider. In fact, e-Commerce fraud might play a just as important role, according to a recent study. 66% of respondents said they wouldn’t buy again from an online shop where their account was compromised. Maybe even more important is, however, the fact that 82% of American retailers stated that they have seen a rise in fraud attempts since the beginning of the global crisis, with promo abuse having the most substantial negative impact on profits, closely followed by account takeovers.
Another factor to consider is the fact that not all stores are alike, and digital stores are no exception to this rule. While most retailers faced the COVID-19 pandemic with new digital tools, some are simply bound to be better than others. Online retail sales at Amazon have been rising at a fast pace since the beginning of the pandemic. Net sales rose by 40% in the second quarter of 2020, and retail sales are also expected to rise 24.9% this year, to a total of $386.40 billion. And let’s not forget that Shopify, a provider of e-Commerce infrastructure, also announced strong financial results in Q2, proving that companies everywhere continue to invest in online shopping.
It’s certain that 2020 marked a new era for online sales everywhere, and the online sales figures from the peak of the pandemic will probably prove hard to beat. Last year brought a massive shift in almost everything digital, and consumers’ new behavior will probably remain focused on e-Commerce for years to come. However, online retailers in the US and abroad should keep in mind that the client always comes first, and a rise in e-commerce fraud might prove just as disruptive as the emergence of new virus strains.
