Pandemic-fueled e-commerce growth is here to stay

E-commerce spending in the US got a massive boost from the pandemic, and much of that growth is here to stay, according to Adobe's Digital Economy Index (DEI).

Online shoppers have spent an extra $183 billion since March 2020 to a total of $844 billion as of February 2021, the company said in its report.

Online spending grew the most in the pandemic’s early days, spiking to 80% year-on-year (YoY) last May. The growth continued at a reduced pace throughout the year, creating a total spending increase of 42% YoY in 2020. That has continued into 2021, with January and February seeing a 34% increase in e-commerce spending.

According to the report, while the spending increases are likely to drop going forward, YoY e-commerce growth is “here to stay.”

This increase in e-commerce spending came partly from consumers who rarely shopped online before. Adobe's survey found that 47% of consumers had never bought certain types of items before, while 9% report never purchasing an item online at all before March 2020.

The increase in spending has affected supplies, with online retailers rapidly running out of stock beginning in March last year. That peaked in July, with out-of-stock products reaching three times the pre-pandemic average, and spiked again in January, this time to four times pre-pandemic levels.

Supply and demand fluctuations also contributed to an uptick in prices. The DEI measures digital purchasing power, which indicates how much Americans can buy online with a dollar. It fell 1% YoY during the pandemic.

Groceries saw the heaviest price increases, with Adobe reporting a 4.2% increase between January 2020 and January 2021. Home goods prices rose 3.9%. According to the report, the price of nonprescription drugs also rose, as did flowers and related gifts.

These increases only pushed digital purchasing power (DPP) down by 1% because prices in many other product categories were still dropping, albeit by a smaller amount. For example, electronics prices dropped 2.2% YoY in 2021 compared to 10.4% in 2019.

The pandemic has also shifted buying patterns despite those price increases, the report suggested. Online grocery shopping spiked 350% as the pandemic struck in March and 230% more people were still shopping for groceries online last month compared to pre-pandemic levels. Other popular categories include home improvements, crafts, games, and books, as people struggled to cope with lockdown conditions.

People have also changed how they collect their goods, with curbside pickup or buy online and pickup in-store (BOPIS) becoming popular to avoid shipping delays. Almost a third (30%) of online consumers prefer to use one of these methods instead of home delivery.

The DEI is the first such report from Adobe that combined analytics from its own products with consumer surveys. It analyzed one trillion visits to retail sites using Adobe Analytics and surveyed 1,018 US consumers at the end of February 2021.

Large e-commerce retailers have made extraordinary gains from the pandemic — Amazon's profits soared 51% in 2020.