In history, several pandemics have impacted the life of humanity, causing changes in daily habits. One such event was in December 2019, the outbreak of COVID-19. In a few weeks, the virus spread without limits and infected millions of people around the world. A critical situation for global health, it put an immediate stop to most economic activities but accelerated the expansion of e-commerce.

Last update January 14, 2022 by Heleen Buldeo Rai & Sabrina Touami.

Many countries put in place restrictions on population movements, to slow down the spread of the virus and prevent health systems from being overwhelmed. The main restrictions included social distancing measures, closures of non-essential venues and social gatherings as well as working and attending school from home. At least 186 countries implemented varying degrees of restrictions, and 82 countries imposed a partial or full lockdown (Han et al., 2020). Personal mobility was reduced to a bare minimum, as demonstrated by smartphone tracking and public transport usage (Asensio & Matas, 2020). According to INSEE statistics, a quarter of residents left Paris during the first lockdown.

These restrictions had many consequences in environmental, social and economical terms, with the evolution of e-commerce as one of them. It impacted consumer behaviour in multiple ways: what they buy, where they buy, in what quantity, and in which frequency. As such, COVID-19 accelerated online shopping practices and transformed our ways of consuming, selling, and accessing goods. These changes are likely to persist towards the future. We are interested in e-commerce and the impact that the crisis has had on this sector. Therefore, we provide an overview of the situation before the crisis, prior to exploring the situation towards the end of 2022, and expectations for what follows after.

E-commerce before the pandemic

Global e-commerce sales have grown by over 20% per year on average since 2010 and reached €2.2tn in 2020, according to Euromonitor (International Post Corporation, 2021). A publication of eMarketer states that its share in global retail has grown from 10.4% in 2017, to 14.1% in 2019 (Lipsman, 2019). Yet the penetration of e-commerce and digital commerce around the world has been uneven, with significant differences between countries and regions. The proportion of people using the internet worldwide is estimated to have increased from 29.3% in 2010, to 53.6% in 2019 (International Telecommunication Union, 2019). Recent estimates are that 3.5 billion individuals globally use e-commerce platforms today, i.e., about 47% of the population.

E-commerce has become the number one priority for many businesses across the globe. The leading business-to-consumer e-commerce companies are based mostly in China and the United States. Anecdotal evidence from the outbreak of SARS in 2002 and 2003 suggests that epidemics can be core catalysts for digital transformation (OECD, 2020). For example: the Chinese company JD.com experienced a first turning point long before the apparition of COVID-19. JD.com was then a chain of consumer electronics stores. In the face of the SARS epidemic, the Chinese restricted their movements and physical commerce collapsed. JD.com then turned to e-commerce to overcome this crisis, becoming the online presence it is today (Zheng, 2020).

E-commerce following the pandemic

Many consumers have discovered the convenience of e-commerce delivery and app-based online services during this time of health crisis. According to Euromonitor, global e-commerce sales grew 26.5% in 2020, while in-store sales fell by 4.3% and total retail sales fell by 0.3%. As a result, e-commerce's share of retail sales increased from two to five times the pre-COVID-19 rate in 2020, i.e., 16.7% globally. Over half of online purchases were made via a mobile device (International Post Corporation, 2021). Again according to the International Post Corporation (2021), e-commerce accounted for an average of 12.8% of retail sales in advanced economies and 9.9% in emerging economies in 2020. On average, the increase in e-commerce sales share between 2019 and 2020 accounted for 44.0% of total change in e-commerce penetration for the period from 2015 to 2020 (International Post Corporation, 2021).

The online marketplace Mercado Libre showed an increase of 40% in average searches per user across its Latin American operations between late February and late May, resulting in the volume of articles sold and deliveries per day more than doubling between the second quarters of 2019 and 2020 (UNCTAD, 2021). Posts around the world delivered peak period volumes for much of the year, and parcels volume growth accelerated to 15.3%, up from only 4.9% in 2019 (International Post Corporation, 2021).

Many people who could do so, stopped visiting shops as the pandemic struck, even where they were allowed to remain open. Google’s monitoring of community mobility data, for instance, found that visits to retail and entertainment establishments fell by 70% between February and April 2020 as the pandemic hit Latin America, while those to grocery and pharmacy establishments dropped by 45%. Yet by September, these figures had recovered significantly, to around 30% and 10% below previous levels.

E-commerce transactions in many countries have partly shifted from luxury goods and services towards everyday necessities, relevant to a large number of individuals. The OECD reports that “the COVID-19 crisis has enhanced dynamism in the e-commerce landscape across countries and has expanded the scope of e-commerce, including through new firms, consumer segments, and products.” Online grocery shopping in particular increased to such an unprecedented extend that retail professionals believe in its potential for lasting change. Growth in food and drink sales accounted for 16.5% of global e-commerce growth in 2020, compared with 12.1% for apparel and footwear (International Post Corporation, 2021). Also the ongoing challenges for brick-and-mortar retail, transformed consumer behaviour and changes implemented by retailers support this expectation (Metapack, 2020). Food products were the single biggest winner in Chinese e-commerce, with an increase in accumulated sales from January to April 2020 of 36%, relative to the previous year (OECD, 2020).

The pandemic pushed online sales among regular e-consumers, but it also proved highly effective in accelerating adoption among e-commerce novices and laggards. Even markets with already high e-commerce use saw a sharp increase in online shoppers in 2020. Research by Accenture shows that behaviour has changed particularly among infrequent e-consumers, those who purchase less than 25% of their items online. While they used to buy on average one in twenty items using the worldwide web, they are now buying one in six items online (Metapack, 2020). In the UK, 15% of consumers buying online during the first lockdown in March 2020 had never shopped online before (International Post Corporation, 2021). The credit card usage of around ten million consumers in Japan suggests that the increase in the share of online purchases in credit card transactions was highest for users in their sixties (from 15.4% in January to 21.9% in March 2020) and those in their seventies (from 10.9% to 16.4%) (OECD, 2020). In China, COVID-19 is said to have sparked a “Silver Tech Revolution”, as millions of elderly Chinese turned to mobile apps for food delivery and entertainment (Yiying, 2020).

This shift to digital transactions has propelled the growth of delivery, transportation, and warehouse jobs, while triggering a decline in in-store retail jobs, such as cashiers. As online retail sales have surged, retailers are closing their physical stores. Macy's and Gap are among many retailers that have announced plans to close hundreds of stores across the United States (Lund et al., 2021). Meanwhile, Amazon has hired more than 400,000 workers worldwide during the pandemic, for warehouse activities but also software and hardware specialists. In China, e-commerce, delivery and social media jobs grew by more than 5.1 million in the first half of 2020 (Weise, 2020).

Several countries were ready to face the health and economic crisis with the means they had, but also because of previous knowledge and experience of the e-commerce market. Others made their first steps towards this new mode of consumption.

In the United States, the share of e-commerce in total retail only slowly increased from 9.6% to 11.8% between the first quarter of 2018 and the first quarter of 2020, it spiked to 16.1% between the first and second quarter of 2020 (OECD, 2020). This e-commerce growth has continued in 2021, with a 6.6% increase in the third quarter of 2021 compared to the third quarter of 2020 (Capgemini, 2022). In the United Kingdom, the share of e-commerce in retail rose from 17.3% to 20.3% between the first quarter of 2018 and the first quarter of 2020, and then increased significantly to 31.3% between the first and second quarter of 2020. In China, the share of online retail in total accumulated retail sales reached 24.6% between January and August 2020, up from 19.4% in August 2019 and 17.3% in August 2018 (National Bureau of Statistics of China, 2020).

Both China and South Korea remain the most advanced markets, with e-commerce penetration rates above 25% in each country, bolstered by strong adoption of m-commerce. According to the International Post Corporation (2021), “Mobile use is paving the way for fast-growing new e-commerce trends. With e-commerce through social media platforms already popular, livestreaming e-commerce – where users can buy directly from a platform streaming videos – was among the fastest-growing e-commerce sectors, particularly in Asia Pacific, with sales more than doubling in 2020.”

In the EU-27, e-commerce increased by 30% between April 2019 and April 2020, while total retail sales diminished by 17.9% (OECD, 2020). The COVID-19 barometer by Kantar conducted a survey among more than 3,000 French, German and British consumers between 26 and 30 March 2020. In the survey, 9% of consumers declare to be shopping more online than before and 32% expect to increase their online purchases in the future (Bouaziz, 2020). Depending on the country, the rate of consumers who usually make more than half of their purchases online has increased between 25% and 80% since the start of the pandemic (Bouaziz, 2020).

The pandemic has accelerated parcel market growth across the globe by several years. Metapack (2020) reports a growth in online orders between March and June 2020 of 60%. The number of parcels delivered in Belgium, the Netherlands and Luxembourg has increased with 78% (Byl, 2020). The growth of online orders in the United States is visualised in the figure.

For 2020, the International Post Corporation (2021) reports an average parcels and express revenue growth of 21.0% and an average parcels and express volume growth in 2020 of 15.3%.

E-commerce after the pandemic?

COVID-19 has prompted behavioural shifts among consumers and businesses, many of which will persist to varying degrees in the long run. A report from McKinsey on the post-pandemic situation and the future of work after COVID, illustrates these different variations before, during, and after the pandemic. In this study, ‘after’ is defined by the authors as following the time of writing (Lund et al., 2021).

Capgemini (2022) surveyed over 10,000 consumers over the age of 18 in 10 countries: Australia, Canada, France, Germany, Italy, Netherlands, Spain, Sweden, the UK, and the US. On this basis, they see an acceleration in interactions with physical stores as consumers return to traditional channels, next to a stabilisation of interactions with online channels. Specifically, 72% of consumers expect to resume significant interactions with physical stores after the pandemic subsides. 76% of 57–75 years old or ‘Boomers’ expect their in-store interactions to be high, versus 66% of ‘Gen Z’ shoppers, those aged 18–24 in the survey. 53% of Gen Z say their level of in-store interactions is high today, compared to 73% of Boomers (Capgemini, 2022).

In the longer term, post-pandemic, shoppers with children in their households reveal a stronger preference for online interactions (49%) than do shoppers without children (33%). Those aged 25-40 or ‘Millennial’ shoppers, have the strongest preference for online interactions (51%) among the generational demographics (Capgemini, 2022). Although the Capgemini (2022) research says that Boomer shoppers have only a limited preference for online (24%), McKinsey finds that three-quarters of people using digital channels for the first time during the pandemic say they will continue to use them when things return to “normal” (Lund et al., 2021).

Forecasts by the International Post Corporation (2021) indicate that new shopping trends could drive a doubling of parcel volumes over the next five years. After growing 26.5% in 2020, global e-commerce sales are forecast to grow 11.6% a year on average for the full period 2020-2025. Sales in emerging economies are forecast to continue growing faster over the period: an average compound annual growth rate of 21.2%, compared with 10.1% for advanced economies. By 2025, more than three out of every five euros spent online will be done via a mobile device, and one in ten will involve a cross-border purchase (International Post Corporation, 2021).

References

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