February 2022 E-commerce Wrap Up

As February draws to a close, we acknowledge that the effects of the pandemic on the e-commerce industry might be waning. Several states have ended mask and limited capacity requirements and depending on the state you live in, consumers are ready to get out and spend money in person. It is evident that consumers are spending more on travel, experiences, as well as retail purchases in-store. Having said that, what implications does this have for the e-commerce and small parcel delivery industries? The good news is that those industries are doing just fine, yet e-commerce companies are working to reawaken consumer interest in shopping online by continuing to provide shoppers with good incentives. Here are some key takeaways from February: 

Buy Online, Pick Up Anywhere (BOPA)

BOPA, or “Buy online, pick up anywhere”, is a new way to entice shoppers. A platform called "Via.Delivery" launched an e-commerce fulfillment offering of BOPA that allows shoppers to get their orders from more than 66,000 locations in the US and around the world. CEO and co-founder, Mitchel Nikitin stated in their announcement on February 8th, “at a time when residential shipping can cost 30% more than shipping to a commercial address, BOPA offers a lower-cost alternative while providing consumers the ability to ship packages anywhere for convenient pickup.” Via.Delivery launched in Europe in 2019 and earlier this month in the US. According to their initial launch research, 1 in 5 shoppers (18%) choose BOPA at checkout. Although they do not expect this to be adopted immediately, they expect that it will become a preferred method of shipping within the next three to five years for merchants and consumers alike. 

Physical Retail Store Changes 

Despite companies experiencing more in-person sales than in the past two years, it appears the theory that the pandemic is irreversibly changing consumer shopping might hold some truth. Companies throughout the pandemic invested their time and money into their digital space. The analytical firm Edge by Ascential predicted that online sales would account for nearly 40% of all chain retail sales by 2026. As a result, not only will online sales rise, but the influence of the internet on in-store purchases will also increase. Edge also reported that the subcategory "digitally influenced" can now be tracked easily. 39% of shoppers were reported to not buy something in-store without reading online reviews first and on top of that 69% of in-store shoppers prefer to look up a product online using their smartphone instead of speaking to a store associate. Now, more than ever, companies need to focus on winning the digital shelf. 

Q4 2021 Sales Numbers Are In

As the pandemic slowly becomes an endemic, industry analysts reported on the effects it has had on e-commerce. The US Department of Commerce Retail Indicator Division released its Quarterly E-commerce Sales 4th Quarter 2021 report on February 18th. E-commerce sales were $870 billion in the US in 2021 which is a 14.2% increase over 2020 and a nearly 51% increase over 2019. The fastest categories of growth in e-commerce were furniture, building materials, and electronics - which grew more than 200% since 2019. Even with the massive growth being surged by the pandemic, there appears to be room for more. Online retail sales still only account for 13% of all retail sales. While we may not see the rapid changes of the last two years, e-commerce is not slowing down anytime soon.  

January E-commerce Increase

Overall, the retail sector started off with a bang in 2022. According to Mastercard Spending Pulse, both in-store and online retail grew across all forms of payment. Compared to January of 2021, January of 2022 grew 10.4% year over year. Some would expect with the massive COVID-19 cases that sales would take a dip, but many analysts say that consumer spending in January was due to COVID fatigue, pent-up savings, wage growth, and consumers deciding to focus on services or "experience-based" expenses. Consumers typically spend significantly less in January due to the heavy holiday spending, however, this year they had shopped more in the months leading up to December to avoid supply chain issues, leading them not to feel the same budget pressures. Consumers have money to spend and they are looking to retail and experiences to spend it.

2022 Supply Chain Predictions 

In his February article for Global Trade Magazine, Lee Smith made several predictions regarding the state of e-commerce supply chains, including the need for online sellers to rethink and adapt their logistics needs. “Recognizing that “just-in-time” supply chains will not return to their prior efficiency, companies will continue to adapt in 2022 by warehousing essential inventory (when possible), diversifying supply chains, and selecting to manufacture closer to the consumer population.” Furthermore, in spite of all the wealth circulating through retail, consumers remain concerned about the inflation of essentials due to problems with supply chains. Shoppers are expecting standards of faster, more reliable services, which isn't easy to uphold when shipments are delayed and products are taking longer to restock. Even if goods did flow more freely in the near future, Smith suggests that business leaders should prepare themselves for higher costs. He continues to predict that the inflation rate will continue to increase, while compliance will add additional administrative costs and burdens. Businesses hope that in 2022, a better logistics landscape will emerge as a result of the supply chain problems of the last two years, but it is evident that online sellers will need to continue to take action to combat unstable supply chains. This is not something that will just resolve itself in time.