The US consumers’ spending on Digital Commerce Business is expected to hit a record $1 trillion, all thanks to the pandemic-driven shift to online shopping this year, as per Adobe Analytics. The forecast anticipates jumps of 13 per cent from 2021, following total spending of $1.7 trillion over the period of two years of the COVID-19 crisis, starting March 2020.
Consequently, the retail sector has been enjoying some of its rosy results in the past couple of years. Walmart has already recorded the strongest first-quarter sales in its history, with its US sales rising 6 per cent year-over-year. This can be partly attributed to people standing stimulus checks but also was connected to the retailer’s Digital Commerce Business success. Walmart has reported online sales rose by 37 per cent YoY and more than doubled over the last two years. This indicates that retailers must step up to the challenge and not just support online sales but also embrace emerging technologies to create connections with customers and make their journey more convenient.
Let us look at the various new trends in eCommerce that helps digitally native to thrive in the ever-evolving landscape:
The Rise of Other Trending Product Categories
Ecommerce during the initial outbreak of the pandemic thrived because people had no other choice barring online shopping. The stores were closed, and shoppers’ fear of contracting the pandemic accelerated the use of virtual platforms, and this phenomenon continued into 2021 until vaccines became widely available. Additionally, consumer demands for goods surged, with consumers spending their stimulus checks and reallocating their expenditure on travelling and other leisure activities, such as restaurants, home repairs, furnishings, and many other items. This led to a massive shift in the products people shop for and altered consumer behavior, and finances caused massive shifts in digital commerce by category.
According to Adobe, online grocery sales increased 103 per cent year-over-year in 2020, where US consumers spent around $73.7 billion online. Shoppers kept up that pace in 2021 and spent $79.2 billion on online groceries, up by 7.2 per cent compared with 2020. Consumers prefer to spend an average of $6.7 billion online each month for groceries, increasing from $3.1 billion pre-pandemic. According to the reports by Adobe, this category was purchased to remain at the top with a whopping $85 billion in 2022.
The reshaping of grocery shopping, a category that offers minimum discounts when compared to legacy categories, such as electronics and apparel. It highlights a shift in the digital economy that supports speed and convenience over cost savings. Other products gaining momentum amid the changing landscape are electronics, hardware/home improvement, and home furnishings. According to reports from Digital Commerce 360, merchants in these categories have increased substantially in 2020 and can maintain growth in 2021. In fact, Adobe has also reported that US consumers contributed to online purchases for around $165 billion for the entire electronics category in 2021. That is high by 8 per cent from $152.7 billion in 2020. Consumers as a whole now spend an average of $13.6 billion online each month on electronics, up from $9.9 billion pre-pandemic.
The Increased Inflation Resulted in Digital Ecommerce Boom
Inflation has played a critical role in exponentially increasing online sales growth. According to Adobe, buyers have paid more than $30 billion for the same amount of goods during the pandemic. A few years back, in 2020, higher online prices added $4.7 billion to ecommerce sales. The next year, the figure jumped to $22 billion, and in January and February of 2022, inflation added $3.8 billion extra to online sales.
It is interesting to note that the higher prices have failed to deter online consumer spending. For instance, the web-only home furnishings giant Wayfair Inc. said that it had increased its prices due to inflation, but customers have not stopped purchasing the product. Their conversion rates are the same. It is suggested that people have more than $2 trillion in their savings accounts than in pre-pandemic. Therefore, this increased bank balance leads to inflation and makes it digestible. Adobe expects that customers could pay $27 billion more for the same amount of goods due to inflation.
The Increasing Omnichannel Strategy to Boost Online Sales
The major shift in eCommerce has been towards an omnichannel strategy, but the question that remains to be answered is that will it continue in the future. EMarketer forecasts that retail eCommerce sales will continue to grow by double digits through the next years as well across the globe. However, it doesn’t mean that foot traffic won’t come back.
It is evident from consumer behavior and the company’s business models that, moving forward, digital organizations can’t choose between online sales and brick-and-mortar stores. Instead, they have to adopt an approach that mixes both worlds’ best and offers a compelling omnichannel experience. Omnichannel is key for survival. As we proceed, retailers can expect regular disruptions. Be prepared for the bullwhip effect, which suggests increasing swings in inventory due to shifts in consumer demand. Businesses and their top management must always be ready to expect that there will be employment disruptions and they will continue given the unpredictable nature of today’s job market. And besides, as customers are moving to physical mode where they want to access products across various touchpoints, it is imperative that businesses adhere to the latest trends.
Closing Comments-
From the factors and trends mentioned above, it is evident that the physical marketplace is yet to pick up with the digital trends brought in the Digital Commerce business models. Moreover, as we enter the new phase of digital transformation, not aligning with the recent trends is impossible. Those who wish to continue with their age-old model shall fall flat. Therefore, businesses must adopt the latest solutions in the digital eCommerce sphere and stream higher. Katalyst Software Services Limited is a leading name in offering eCommerce development services to businesses willing to fly high with the changing landscape in the digital space.
