Brown on Business

November 30 - December 6, 2020

Advent of “Brick-to-click” e-commerce shift is here

By Wesley Brown
wesley@dailydata.com

In about the same space and time it takes a teenager to navigate his adolescent years before entering adulthood, online shopping has been fully embraced by U.S. consumers as an American way of life in the past decade.

Not so long ago after the turn of the century, there were still hordes of Americans taking vows to never make an online purchase over a computer, cell phone or some other digital device. Now, amid the COVID-19 pandemic and the nation’s heightened virtual reality experiment, new data is showing a huge surge in digital purchases by Americans of all ages of everything from toilet paper and groceries to expensive jewelry and even new cars.

And that growth in online money exchanges is not just coming Amazon and Walmart, although the two retail giants still dominate the e-commerce food chain. According to eMarketer, Amazon remains the king of remote sellers in the U.S. with an expected 38.7% share of e-commerce sales going into 2020. With zenith online sales growth up 97% in the second quarter, mostly dominated by Bentonville retail giant’s curbside pickup business, Walmart.com is far back with e-commerce sales of 5.3% over the same period. Apple holds steady at third place in online sales with 3.7% of estimate remote transactions.

But the competition is catching up fast. A recent report by San Jose, Calif.-based software giant Adobe analyzed over one trillion visits to U.S. retail sites and 100 million shopping bar code transaction from 80 of the 100 largest U.S. retailers. That same report said smaller retailers are also seeing strong growth amid the coronavirus pandemic.

From its data, Adobe predicts that U.S. online holiday sales during the ongoing pandemic will total $189 billion, shattering all previous records with a 33% year-over-year, equal to two years’ growth in one season. And if consumers receive another round of stimulus checks and physical stores need to shut down in large parts of the country, the report notes, consumers are expected to spend an additional $11 billion online, surpassing a total of $200 billion or 47% above year ago levels.

“As retailers adapt to consumers’ new behaviors in this pandemic, we expect earlier discounts, more shipping and pick-up options and uncertainty around in-store purchases to drive this year’s online holiday sales to record highs,” said John Copeland, head of marketing and customer insights at Adobe. “This year is unlike any in the past, and for the first time we are no longer referring to peak holiday sales as Cyber Week - it’s now Cyber Month.”

In the weeks leading up to the Thanksgiving weekend, Adobe predicts that consumers will spend $56 billion, up a robust 37% compared to 2019. Amid concerns around shipping delays, product demand and the uncertain economic environment, retailers will start holiday sales much earlier this season. A record 33% of consumers plan to have their holiday shopping complete by Black Friday.

Here are some other spicey nuggets from the Adobe report. 

In lieu of friend and family gatherings this year, Americans will be purchasing and sending gifts. The rate of orders shipped directly from retailers to friends and family will increase by 18% this holiday season.

Curbside pickup evolves, remains popular option amid in-store shopping concerns: BOPIS (buy online, pick up in store), now including curbside pick-up, will have over 40% more orders vs. 2019. As people panic buy the week leading up to Christmas, BOPIS is expected to top 50 percent of all orders at retailers that offer BOPIS.

Small retailers, or those companies with between $10 million and $50 million in annual online revenue, will see a 107% boost to their revenue versus only 84% increase for large retailers with over $1 billion in yearly remote purchase. Still, large retailers will continue to dominate with online sales growing 55% year-over-year versus 8% for small retailers.

Closer to home, 51% of consumers plan to support small and local retailers on Small Business Saturday on the day after Thanksgiving and Black Friday. Some 38% of consumers said they plan to shop at smaller retailers throughout the season.

In another holiday shopping forecast highlighting online sales growth, Wall Street consulting giant Deloitte offered two Holiday retail sales scenarios because of the pandemic. One scenario -- call it the “Grinch that stole Christmas” forecast -- predicts that holiday sales are only likely to increase between 1% and 1.5% compared to a year ago.

The other, “Have a Holly Jolly Christmas” scenario, forecasts that e-commerce sales will grow by 25% to 35%, year-over-year, during the 2020-2021 holiday season, compared to sales increasing by 14.7% in 2019. E-commerce holiday sales are expected to generate between $182 billion and $196 billion this season.

“The lower projected holiday growth this season is not surprising given the state of the economy. While high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat,” said Daniel Bachman, Deloitte’s chief U.S. economic forecaster. “E-commerce is likely to be a big winner because consumers have shown a clear movement towards buying online rather than at brick and mortar stores."

Overall, Deloitte’s retail and distribution team projects that holiday spending will result in sales between $1,147 billion and $1,152 billion during the November-January timeframe. Of course, the reason for the “tale of two holidays” forecast scenario is the unparalleled uncertainty amid the pandemic as the nation awaits a new COVID-19 vaccine and a new president.

“Regardless of the scenario, however, the consumer’s focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store, and the criticalness of safe and speedy fulfillment.”

And while 2020 will be remembered as one of the most surreal and time-bending years on the Gregorian calendar, history may also look back at this anomaly in time as when consumer and retailers made the virtual leap from brick-and-mortar service and transitioned to a true digital world.

Amazingly, evidence of these phenomenon has already taking over the holiday shopping season as once raucous scenes that played every Black Friday are now expected to undergo “brick-to-click” transformation in front of a home computer or a smartphone. Such are the strange times we now live.