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E-commerce: Entering The Next Wave of Growth

The Blue Water Team

Two and a half decades in, e-commerce continues to grow. In the second quarter of 2020, e-commerce grew more than 44 percent over the same quarter in 2019. 

E-commerce will likely continue to grow in areas such a groceries, health, and auto sales, which together account for 44 percent of retail sales in the United States. 

As the pandemic drives certain populations to adopt online shopping, and as technologies such as virtual reality take hold, e-commerce should continue to expand. 

The Growth of E-Commerce

E-commerce has grown across industries, starting with electronics and appliances. In 2015, 14 percent of purchases for electronics occurred online. That number today is 50 percent. 

Clothing also quickly became a popular item to purchase online, and consumers' willingness to buy small items, such as clothing and shoes, demonstrates the extent to which e-commerce has become commonplace for many consumers. 

Generational E-Commerce Adoption

E-commerce is particularly popular among millennials and Gen Xers. These generations constitute a huge and affluent potential group of consumers numbering 137 million people with average household spending of $49,000-$65,000.

COVID-19 and E-Commerce

These characteristics of e-commerce are starting to change, thanks to the influence of the COVID-19 pandemic. 

Faced with the pandemic, for example, older generations are beginning to recognize the benefits of online shopping, while all consumers are beginning to purchase items, such as groceries and healthcare products, online. 

For example, during the pandemic, more than half of American consumers have made at least one grocery or health-related purchase online, and the percentage of people doing so is expected to keep growing. 

Retailers are noticing dramatic shifts in online shopping. Walmart, for example, reported that in the 2nd quarter of 2020, the percentage of online sales had doubled from the 2nd quarter of 2019. 

Business Response to E-Commerce Growth

Businesses are responding to these increases in e-commerce activity. For example, Walmart is increasing the items it makes available to consumers online and launching a partnership with Shopify.

Similarly, the auto industry is finding ways to sell cars directly to consumers online. Sometimes, these sales even include dropping the vehicle off with the purchaser and completing paperwork online for a totally virtual, and contactless, experience. 

New E-Commerce Consumers and Technologies

As e-commerce expands, some of its growth is due to older generations, such Baby Boomers, adopting online shopping. 

New technologies are also driving e-commerce growth. Consider these technological changes that are already affecting e-commerce:

  • Social commerce, whereby consumers can make purchases from within social media platforms.
  • Augmented and virtual reality that can give consumers a more realistic online shopping experience and allow them to complete tasks such as trying on clothes, all virtually. 
  • Drone delivery which can make deliveries faster and more convenient, particularly for remote locations. 

The growth of e-commerce should continue, and with it comes an opportunity to embrace investment in this exciting and expanding field.  Check out some of our e-commerce investment ideas.