Is E-Commerce Here To Stay?
If anyone at the start of this year could have accurately predicted how 2020 would unfold, I think it is fair to say that almost all of us would have taken the news with quite a bit of skepticism. But as the pandemic continues, this extraordinary series of events has come to play with massive repercussions. Covid-19 has changed many aspects of day-to-day life for almost all of us in the world, from our schedules to our work. The pandemic even managed to interrupt the NHL season, if only for a few months.
The impact on the economy has been huge. Nearly all of the world’s developed and emerging economies have faltered, with growth projections seeing 2020 to be a year of shrinking economies. The International Monetary Fund projected Canada (in June of this year) to see growth decrease 8.4% with only a 4.9% increase expected for 2021. However, if we were to trawl through an accurate prediction in January, to see what we would have in store for us, we would have found a very interesting footnote in the section detailing business.
As physical stores have had to close, a wave of new online stores has begun to emerge. Through platforms such as Shopify or WordPress, many have taken to selling online; and as the pandemic continues, this wave of e-commerce grows larger. And as we continue to live with Covid-19 and lockdown measures, more and more businesses will turn to online options. But is this only a momentary growth, a bubble that could burst? Or are we on the edge of a massive change in how we shop?
With everything considered, it makes complete sense to move into e-commerce. The 21st century is a digital age of communication and connection, with more people than ever online. It allows businesses to connect with customers on a much larger scale, as well as providing products at far easier convenience for the consumer.
Along with this, Canada is a country that was already seeing a rise in online shopping. My agency is based in Canada, and from my perspective, e-commerce initiatives have taken off in the last few months that illustrate this shift to online. Even before this year, e-commerce was growing in Canada, though at a far slower rate. Ranked as one of the biggest e-commerce markets in 2019 by eMarketer with $49.8 billion in sales, Canada has seen a steady increase in the total percentage of sales, although the rate of growth decreasing slightly, with each passing year.
But the massive global shift by both small and large businesses to e-commerce has rapidly increased growth and sales. However, as e-commerce seems to gain in strength, the question comes up: Is this simply a momentary reaction to the events of this year, or are we seeing a permanent shift in how we shop?
The best place to start is by acknowledging that no matter what happens through the end of 2020 and into 2021, e-commerce is not going to replace physical stores completely. While this growth is extremely impressive, physical stores are not going to disappear. But it is clear that e-commerce has changed how we shop.
Many big businesses with a large brick-and-mortar store presence, including Walmart, Canadian Tire and Sobeys, are leaning toward this e-commerce growth being a permanent part of how we now shop. Each has seen their online sales flourish this year, helping soften the blow of lost sales from physical stores.
Both Walmart and Sobeys have begun a rapid expansion of their online services, with Walmart Canada investing $3.5 million in new “smart stores” and infrastructure to help fulfill orders. Meanwhile, Sobeys, in partnership with British online supermarket chain Ocado, has recently unveiled a new state-of-the-art fulfillment center in Vaughan, Ontario, using robotics to help procure orders at a faster rate. Both have seen the growth of e-commerce and judged that it needs to be something that they are invested in and ready to capitalize on.
It’s clear that the major brands see this year’s growth in e-commerce as an indicator of where the consumer landscape is moving. However, this does not mean that the level of growth will continue into 2021. And from most experts’ evaluations, it will likely see a decrease, but this does not mean growth will stop. Whilst it is to be expected that the total percentage of sales is to be much higher this year, with physical stores being closed for periods of time, the increase in growth in global retail e-commerce sales is projected to “decelerate to a 16.5% growth rate in 2020 (down from 20.2% last year).”
This fall does still indicate that e-commerce will increase. Consumers have seen how useful and convenient online shopping can be, providing more choices and options than before. And with more and more shoppers saying that they would continue to shop online, it is most likely that it will keep a major role in retail. E-commerce is set to play a prominent role, but it will likely not skyrocket as it has this year.
Whilst it may seem a long way off at the moment, many of the current shopping habits are due in part to the effects of the pandemic, and as it begins to wane, some of these habits could decrease. However, consumers have seen the convenience of online shopping and its growth is not one that will suddenly abate. What is extremely clear is that e-commerce has had a major impact on this year, not just for retail, but on how consumers shop and how brands connect with them.