Data shows e-commerce as a percentage share of all US retail has almost returned to pre-pandemic levels; in March e-commerce dropped YoY as in-store sales rose
The 2020 lockdowns compressed a decade of channel shift into months: eMarketer projected US consumers would spend $710B online that year, pushing e-commerce to a record 14.5% share of retail, and analysts treated the surge as evidence of a potentially permanent behavioral change — a thesis that sent e-commerce stocks soaring.
Two years on, the data is walking that thesis back. As this report and the adjacent share-of-retail analysis show, e-commerce's slice of US retail has fallen almost all the way to pre-pandemic levels, with March online sales declining year-over-year even as in-store sales grew.
First-order effects
Retailers that built fulfillment and delivery capacity for the 2020 peak now face a demand mix tilting back to stores, leaving online infrastructure sized for a share level that no longer holds.
Pure-play e-commerce operators lose the easy year-over-year comparisons that flattered growth through 2020–2021, since March marked an outright YoY decline in online sales.
Second-order effects
The UK clothing market offers the template for what follows: shoppers returning to physical stores there exacerbated online retailers' logistics costs and exposed them to new upstarts, pressures US pure-plays could now import.
Hybrid formats built during the pivot — like the curbside pickup programs Target and other chains scaled in 2020 — become the retention mechanism for chains trying to keep pandemic-acquired online customers without pure delivery economics.
Third-order effects
If the reversion holds, capital allocation in retail shifts from 'online will replace stores' toward omnichannel economics, punishing pure-play models and rewarding chains that treat digital as one channel among several.
The episode becomes a cautionary benchmark for extrapolating crisis-era adoption curves: the pandemic accelerated behavior, but acceleration proved partly reversible once the constraint forcing it was removed.
The trend: Pandemic-era e-commerce adoption is proving partially mean-reverting rather than fully permanent, with retail settling into a hybrid store-plus-digital structure instead of the wholesale channel shift analysts projected in 2020.
We are basically “kissing” the pre-pandemic trendline for ecomm as a % of retail sales. It's not that digital growth is going away - it's just that the growth may end up being what we would have expected given the pre-pandemic trajectory. https://www.wsj.com/... https://twitter.c…
This was pretty obvious for American shoppers bc data even during pandemic showed preference towards BOPIS (buy online pick up in store) Specifically when it comes to grocery, we still crave IRL discovery/selection doesn't mean URL is going anywhere https://www.wsj.com/...
Very interesting WSJ story that ties into my earlier Amazon tweet. Most investors don't want to consider the possibility online purveyors' numbers might have been inflated by COVID-related effects because everybody (especially Wall St.) owns those stocks https://www.wsj.com/...
“March was the first month since the pandemic hit during which e-commerce sales declined from the same period a year earlier while in-store sales rose, according to Mastercard...The drop in online spending was 3.3%.” https://www.wsj.com/... $AMZN $ETSY $W https://twitter.com/...
“The pandemic was supposed to push all shopping online. It didn't.” This is neither good nor bad - e-commerce in the US does not solve a problem, it solves for convenience. Thus it's unsurprising only 15% of retail is online. It will remain a slow boil. https://www.wsj.com/...
There was an enormous amount of hyperbole about online during the pandemic. Some of it was complete nonsense - as the numbers are now showing. The truth is that a lot of people like in-person shopping and don't want to sit at home in front of a screen all day. https://twitter.com…
Interesting. In India, e-commerce has picked up further (yes, from a much lower base) “When millions of locked-down Americans went online during the Covid-19 pandemic, it looked like the possible start of a permanent shift in consumer behavior.” https://www.wsj.com/... via @WSJ
The pandemic boosted e-commerce to unforeseen heights that many thought would last. It hasn't. W/ @rudegeair & @CharityLScott https://www.wsj.com/...
Now who would have thought that, really?!?! Economics of stores, persistence of human habits, and shopping as an experience are hard to overlook. The Pandemic Was Supposed to Push All Shopping Online. It Didn't. https://www.wsj.com/...