The year 2020 is likely to remain perhaps the most dynamic in terms of shopping trends. As the pandemic spread globally, many people turned to digital retail giants, such as Amazon, for their daily necessities. Since governments closed many stores around the countries, the main way of purchasing “non-essential” items was online. The following sections explore the main winners of the pandemic and what happened to other businesses.
The lockdown unavoidably led to increased online sales, but other trends and behaviors, too. For example, a popular website for promo codes, Promocodius, has gained significant recognition from numerous customers. This is because more and more people started to look for discounts and coupons for their favorite brands. In fact, the demand for Promocodius’ promo codes has increased by 13% in 2020 compared to the previous year, according to their experts.
From Physical to Digital
Many professionals estimated that online retailing is the future of business, but no one expected this prediction to turn into reality so rapidly. However, the acceleration of online shopping in 2020 has profound consequences for how people work and function, the concentration of corporate power in the US, and the decline of brick-and-mortar store chains, such as shopping malls and department stores.
An impressive aspect is that people stuck with online shopping even after the restrictions had been lifted. One reason is quite obvious – virtual stores are more convenient as you do not need to go through different aisles to purchase your necessities, and then spend your time waiting in a queue for checkout.
At the end of 2019, only about 13% of retail purchases were online, according to a survey conducted by Mastercard. This increased to an astonishing 20% at the end of 2020; in normal circumstances, this increase would have taken a few years to happen organically.
The Three Retailer Giants
There is no doubt that Amazon reaped most of the benefits in this situation. Its revenues in the US grew by 39% in 2020, while its market share rose to 39% of whole online retail in the United States, as indicated by eMarketer.
This led to record profits and revenues for Amazon, even though they experienced delivery delays, capacity problems, labor issues, and even spending several billion dollars on pandemic-related safety measures. Even more, Amazon stood out from the crowd even during the holiday months; while most retailers stopped promising timely deliveries, Amazon still had the same-day and next-day delivery guarantee for most orders up to December 23 due to its continuously expanding delivery network and broad warehouse coverage.
To a much lesser extent, Walmart and Target also benefitted from the pandemic. They had a smaller gain in market share, mostly attributed to the early months of the pandemic. This growth was already in motion due to increased curbside and in-store pick-ups.
What About the Small Players?
Fortunately, many small businesses were also able to implement online services. One main example is Shopify, a platform that sells software for small- and mid-sized retailers. They registered a revenue increase of 100% compared to the previous year. This is due to the urge of numerous physical stores to go online in order to stay in business during the pandemic, resulting in a triple market capitalization for Shopify, which is 50% more compared to Target, a discount retail chain store with nearly 6 decades of experience on the market.
During the early days of the pandemic, many customers turned to small suppliers of masks on Etsy, an online marketplace, as they were able to produce them at a much higher rate. Since then, however, customers have bought many other items, too, apart from masks, resulting in hefty profits for the marketplace and its merchants. Overall, Etsy’s revenues more than doubled until September 2020.
The pandemic has completely eradicated the idea that e-commerce is an option – rather, it is a necessity for today’s businesses. Despite the end of the lockdown in the US, consumers are still shopping online. As one would expect, the business dynamics are less harsh for retail giants, such as Amazon, but small business players can still survive if they approach one of the many online marketplaces dedicated to them.