A trillion dollars is a lot of money, by any stretch of the imagination. Now it’s a bit of a benchmark, perhaps a psychological one. After all, on Wall Street not all that long ago, investors waited with bated breath to watch Apple and other Big Tech names breach the trillion-dollar market cap.
As for another trillion-dollar milestone: eCommerce sales are expected to reach $1 trillion next year – and that’s tied to U.S.-based consumers alone. That’s according to estimates this week from the Adobe Digital Economy Index report, as the great digital shift that has been well-documented in these digital pages is being underscored by other providers’ research and findings.
The momentum is clearly there, as Adobe has estimated that in the U.S., consumers spent $844 billion online from the period measured from March 2020 to February of 2021. Drilling down a bit, Adobe has estimated that eCommerce got a $183 billion “boost” in that period. We’re on track, then, for an eCommerce “year” that sees a projected range of about $850 billion to $930 billion – and we’re not even done with the first quarter.
Here’s a kicker: Adobe has estimated that retailers have had a rough time meeting demand, and have been grappling with stockouts. Stockouts, we note, translate into lost sales opportunities – which may indicate that in the past 12 months (and even in the present period), merchants’ revenues would have been even loftier had there been adequate inventory on hand.
Anecdotal evidence, illuminated during earnings season, pains the picture that eCommerce might be even more turbocharged if demand and supply were more in balance – which indicates the need for more flexible supply chains. Costco, in just one example, has not able to keep imported cheeses in stock because shipping containers are in short supply.
Up and to the Right
But frictions aside, the eCommerce trend has been inexorably up and to the right. To get a sense of scale and shift – and the difference a pandemic makes in hastening the adoption of digital conduits – the U.S. Census Bureau estimated last year that total eCommerce sales in 2019 were about $601 billion. In other words, taking 2022’s $1 trillion estimate and the $601 billion logged in 2019, we’ve got a compound annual growth rate of just under 19 percent.
It’s interesting to note, too, that even though retail sales slipped by 3 percent in February, as reported by the Census Bureau, non-store retail, which includes eCommerce, was up 25 percent. Drilling down a bit, the most notable recent spending gains were tied to things that make being stuck indoors just a bit more palatable. Spending on home improvement products was up 60 percent; online grocery shopping surged by 230 percent.
To be sure, the spending categories may shift moving forward. Perhaps as consumers start to venture outside, the prioritization of what they need to buy online and have shipped to their homes will shift. Perhaps home furnishings will recede a bit, and clothing will pick up – if indeed people are traveling to the office at least s couple of days a week. But what won’t shift is the nature, and entrenched general behavior, of the great digital shift itself.
As estimated by PYMNTS in a recent “Pandenomics” report, even consumers who plan to get vaccinated are unlikely to go back to shopping in brick-and-mortar realms the way they once did. PYMNTS’ data shows that 54 percent of all consumers who are “very” or “extremely” likely to get the vaccine have shifted to performing at least one of their routine activities online since the pandemic began. A majority of them – at three-quarters of this subset – are intent on continuing to keep up their online activities at least somewhat as often as they do now after the pandemic has subsided, particularly when it comes to retail spending.
This underpins the momentum that could get us to a $1 trillion eCommerce tally in a hurry, and perhaps even surpass it sooner rather than later, especially if the economy improves. Grocery shopping stands out here: 21 percent of consumers who are likely to get vaccinated have shifted to buying their groceries online, and 77 percent plan to keep doing so even after the physical world reopens.
Get ready, then, to approach the trillion-dollar eCommerce mark – and hurdle it.