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During the pandemic, e-commerce expanded at an astounding rate of 33.6% in 2020, reaching a staggering sum of around $800 billion. In fact, according to a recent prediction by Emarketer, e-commerce would expand by a further 13.7% in 2021 to reach $908 billion. This is true, although the pandemic has subsided, in-store shopping is on the upswing, and a higher portion of consumer spending is shifting back to services like travel and live entertainment.
During the pandemic, online sales experienced a remarkable increase. The eCommerce industry has begun to return to pre-pandemic levels with the easing of restrictions and the reopening of physical businesses. The data on web traffic to eCommerce and Direct-to-Consumer (DTC) sites in the US clearly shows a falling trend. In the US, in-store sales have been rising at the same time.
Inflation is at its greatest, wages are rising, and unemployment is at record lows. Shipping, fulfilment, labour, and customer acquisition expenses are all increasing regarding eCommerce. Among online retailers and marketplaces, brands fared the best during the pandemic. With the start of the pandemic, sales of brands increased gradually, while those of sellers and marketplaces increased quickly. People were urged to shop online for necessities due to lockdown limitations. Customers sought locations where they could buy a range of things in one location, which was advantageous for large merchants and marketplaces.
Retailers, marketplaces, and brands all experienced a decline in online traffic after the outbreak. Customers stopped exploring and making purchases online once they started engaging in outside activities and shopping in physical stores. Up until May 2022, brands were the only ones seeing positive traffic growth over pre-pandemic levels compared to online traffic growth.
Given that online sales peaked during the pandemic, eCommerce will continue to be a crucial component of most businesses going forward. eCommerce businesses should be prepared to experience a further decline in site visits and online sales when customers reduce their spending due to inflation. The future will involve finding a balance between online and physical stores. Additionally, businesses will keep investing in DTC channels to increase client proximity.
The traffic volume to all significant eCommerce categories decreased when the pandemic restrictions loosened. Due to their greater mobility, customers made fewer online purchases and switched to discretionary spending. Consequently, 2021 saw increased apparel sales, outdoor activities, and entertainment. Demand for these goods remained high in 2021 because of the anticipation of returning to the norm and lockdown savings.
Customers began to face the unpleasant realities of pay increases not keeping up with high costs and inflation once more by 2022. This required many households to reorder their budget’s non-discretionary purchases such that basics came first. However, people would continue to favour internet purchasing because of its convenience during the pandemic. People are spending less than they did in 2021 because of the peak in inflation, a drop in consumer confidence, growing in-store sales, and the rise in inflation. eCommerce sales are still well above those before the epidemic, despite a reduction in year-over-year growth rates.
