There is no question about the fact that the COVID-19 pandemic and more recent problems—like inflation and the ongoing conflict in Ukraine—are still taking their toll on various industries around the world, including e-commerce. The global healthcare crisis reshaped shopping patterns in the US and abroad, thereby changing consumer behavior for years to come and fueling new trends that are already impacting the market. Although positive trends, like m-commerce, will undoubtedly change the future of e-commerce for the better, one of the most important issues to consider in 2022 is mounting inflation.
According to CNBC, US retail sales rose by 0.3% in August, even though American shoppers continued to struggle with inflation. While the rise was higher than initially anticipated, it was also the result of a jump in sales of motor vehicles and parts, as reported by dealerships. Overall retail sales managed to grow slightly in August compared to July, but online sales sagged 0.7% during the same period. One of the reasons for the drop is undoubtedly inflation—an issue that could make American consumers give up certain purchases.
Inflation is not caused solely by the recent COVID-19 pandemic; it is also linked to the geopolitical situation and other issues, such as Russia’s unjust war in Ukraine. The unpredictable nature of these problems can make accurate projections more difficult for both customers and experts.
Online Holiday Sales Could Stagnate in 2022
According to the Salesforce Shopping Index, holiday online sales could stagnate in 2022. The research, which examines information from more than one billion consumers worldwide, indicates that online sales in the US could reach $265 billion in November and December this year. The projected figures are similar to those from 2021, in which a cloud-based software company reported that online holiday sales during the same months grew 9% year-over-year in the US, ultimately reaching $257 billion. In 2022, however, these figures will represent an important stagnation in e-commerce, primarily caused by mounting inflation.
Moreover, the study demonstrates that online retailers could face other problems too as suppliers’ costs are now on the rise and wages and transportation costs could surpass retailers’ ability to pass costs onto customers. According to Salesforce, 10% of retailers and online stores’ profits may be at risk in 2022. Rob Garf (VP and GM of Retail at Salesforce) explains that retailers in the US and abroad are likely to experience numerous pressures this year as increased labor wages, rising gas prices, and inventory carry costs will impact businesses. He also pointed out that retailers could limit the damage by automating and scaling their operations.
Positive Projections Should Be Considered
Not all projections for the future of online sales are pessimistic. In fact, Deloitte says online sales could actually increase by 12.8% to 14.3% year-over-year during the 2022 holiday season. While the company admits that economic slowdowns will definitely impact e-commerce and limit the number of sales, it also predicts that online holiday sales could reach $260 billion–$264 billion this season. According to Deloitte, consumers in the US and abroad could turn to online deals more and more if inflation continues to plague the economy.
Not only does Deloitte predict more online sales during the holiday season, but it also anticipates that overall retail sales will grow by 4% to 6% during this time. However, Daniel Bachman, Deloitte’s US economic forecaster, warns that inflation is likely to remain a problem for retailers, as it could make them see “less growth in sales volume.” Nick Handrinos (Vice Chair at Deloitte LLP) states that inflation could continue to curb consumer demand, prompting shoppers to change the way they spend their holiday budgets in 2022. He adds that aligning with consumer demands and offering more inexpensive options could become the key to success.
E-commerce has gone through significant changes since the beginning of the COVID-19 pandemic, and it is likely to experience new disruptions even as the crisis wanes. However, online retailers could enjoy a successful holiday season in 2022—especially if they learn to embrace new challenges.
