As COVID-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online.
According to Mastercard’s latest Recovery Insights report, this amounted to an additional $900bn being spent in retail online around the world in 2020. Put another way: in 2020, e-commerce made up roughly £1.50 out of every £5 spent on retail, up from about £1 out of every £5 spent in 2019.
For retailers, restaurants and other businesses large and small, being able to sell online provided a much-needed lifeline as in-person consumer spending was disrupted.
Roughly 20-30 per cent of the Covid-related shift to digital globally is expected to be permanent, according to the report.
The report draws on anonymized and aggregated sales activity in the Mastercard network and proprietary analysis by the Mastercard Economics Institute. The analysis dives into what this means by country and by sector, for goods and services, and within countries and across borders.
“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 prioritized digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital.”
While the digital transformation has been neither universal nor consistent – due to geographical, economic, and household differences – the report uncovers several key overarching trends:
- Economies that were more digital before the crisis—such as the UK and US —saw larger gains in the domestic shift to digital that look more permanent than the countries that had a smaller share of e-commerce before the crisis.
- In the UK, the e-commerce share of retail sales pre-crisis was 22 per cent, rising to 31 per cent at the peak of the crisis. The current level stands at 24 per cent, so expect this shift of two percentage points to be permanent.
- 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, 70-80 per cent of the grocery e-commerce surge will likely stick around for good. As an example, as a result of the lockdowns in the UK, roughly one-fifth of all grocery shopping is now done online.
- Consumers increase their e-commerce footprints, buying from up to 30 per cent more online retailers: Reflecting expanded consumer choice, analysis shows that consumers worldwide are making purchases at a greater number of websites and online marketplaces than before. In the UK, people are buying from 22 per cent more online stores, on average.
- International e-commerce rose 25-30 per cent during the pandemic: International e-commerce got a boost both in sales volume and the number of different countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25-30 per cent year over year from March 2020 through February 2021.
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