Online Shopping Is Bananas Confusing
The mantra of 2022 should really be: No one knows anything.
It’s stunning how little we understand about how the pandemic has changed our lives and our country. It’s not clear whether the U.S. economy is hot or not, or if big cities like New York will be forever scarred. We aren’t sure if women’s careers have been permanently impaired or if our mental health will be OK.
The future of our online shopping habits is another unknown.
The government disclosed recently that America’s e-commerce boom during the pandemic was even bigger that it previously believed. But in 2021, that trend started to backslide a bit. Physical stores beat e-commerce last year, and they continue to do so this year. The trajectory of internet buying has flipped from bananas to bananas confusing.
Now, corporate executives, retail analysts and economists are trying to figure out how quickly we might move to a future in which online shopping is the primary way to shop. Will internet buying return to something like the fairly steady growth rate of the decade before 2020? Or has the pandemic permanently turbocharged our e-commerce lives?
Don’t expect a definitive answer for a long time, but the next few weeks of clues from Amazon, Walmart and government sales data will give us a better idea.
This is not just a nerdy debate. Our collective buying behavior sways trillion-dollar companies, millions of retail jobs and the health of the U.S. economy. The uncertainty about the direction of online shopping is one of the biggest questions facing the tech industry and financial markets right now.
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I’ll try to present the shopping situation as clearly as I can.
For most of the decade before 2020, Americans bought more and more online at a predictable pace. E-commerce sales went up by about 10 to 15 percent a year, according to Census Bureau data, grabbing a little more each year from the money that Americans spent in stores.
Then internet shopping went hyperactive, with our online buying climbing by at least 50 percent in the first months after the virus started spreading in the U.S., according to recently revised government figures.
But then last year, shopping at physical stores picked up speed, and online shopping has since lost ground. For many people, it feels like a relief to roam store aisles again. High inflation may also be pushing people to devote more of their budgets to essentials that we still overwhelmingly buy in stores.
Other signs point to a similar picture of meh growth for internet purchases, including data from Mastercard SpendingPulse, which tracks U.S. purchases, that showed e-commerce sales increased just 1.1 percent in June from the same month in 2021. In-store purchases rose nearly 12 percent.
None of this is a shock. Of course we weren’t going to keep shopping online as if it were spring 2020. And it’s likely that online shopping today is a much bigger chunk of Americans’ spending that it would it have been if the pandemic never happened.
The open question is what happens now. Will we go back to the relatively slow-and-steady online shopping growth of 2019? Or will the hermitic habits learned in the pandemic’s early phase continue to influence our shopping, making this growth even faster? Or maybe, even slower?
This is all a major headache to anyone who sells stuff, but it matters to us, too. Amazon has said that it overestimated how enduring the online shopping mania would be and that it spent too much on new warehouses and other things. The company is pulling back, which affects people’s jobs and communities where Amazon is retreating.
And, I’m sorry to bring this up, but a golden age for online shoppers might be at risk. Hangovers from the pandemic and other changes have made it more difficult and expensive for companies that sell stuff online to buy, ship, store and advertise their products. If online shopping has a less rosy next couple of years, merchants large and small may rethink how much money they’re devoting to e-commerce features that we enjoy, like free shipping and order pickup in stores.
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