Shoppers spent US$900bn more online last year – and the trend will stick
Consumers worldwide spent an additional US$900 billion online last year as the Covid-19 crisis forced people to stay home and observe social distancing through much of the year.
According to Mastercard’s latest Recovery Insights report, Commerce E-volution, about $1 of every $5 spent on retail worldwide was spent online last year, compared to $1 in every $7 in 2019.
More significantly, Mastercard predicts between 20 and 30 per cent of the shift to online will be permanent.
“While consumers were stuck at home, their dollars travelled far and wide thanks to e-commerce,” says Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “This has significant implications, with the countries and companies that have prioritised digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital.”
Dwyer cautions that the digital shift has not been universal or consistent, due to geographical, economic and household differences from one market to another. However the researchers identified some common themes:
Early digital adopters go into overdrive: Markets where online shopping was already widely adopted – such as the UK and the US – experienced larger gains that appear to be more permanent, than markets where digital adoption was less prevalent, such as Argentina and Mexico. However, Asia Pacific, North America and Europe were the strongest regions in growing e-commerce adoption.
Grocery and discount store digital gains look sticky: Essential retail sectors, which had the smallest digital share before the crisis, saw some of the biggest gains as consumers adapted. With new consumer habits forming and given the low pre-Covid user base, Mastercard expects between 70 and 80 per cent of the increased grocery e-commerce shopping to endure.
International e-commerce rose 25 to 30 per cent during the pandemic: Cross-border e-commerce saw a boost both in sales volume and the number of different countries where shoppers placed orders. With more choices at their fingertips, consumer spending on international e-commerce grew around 25 to 30 per cent year on year from March 2020 through February 2021.
Consumers increase their e-commerce footprints: Consumers worldwide are making purchases at a greater number of websites and online marketplaces than before.
The report drew on anonymised and aggregated sales activity across the Mastercard network and proprietary analysis by the Mastercard Economics Institute.