The 2020 Race to $700 Billion: How COVID-19 is Redefining the Role of e-commerce
The race is on – and $700 billion is at the finish line. That’s what economists forecast digital sales in the U.S. to reach in 2020. $710 billion to be exact, an 18% increase from last year.
There’s no denying COVID-19 has changed the way consumers purchase goods. Stay-at-home mandates have forced many people to shift their shopping routines to online platforms like Amazon. Now that we are more than halfway through the year, it’s becoming clearer what this could mean for the future of business: success or failure.
In June, Adobe released its latest Digital Economy Index, a global economic report that measures the buying power of digital consumers. One of the most surprising figures in the report shows that total online spending for May surpassed forecasts by $77 billion, which equates to more than half of the 2019 holiday season. June generated $73.2 billion in online spend, a 76.2% year-over-year increase. In total, the first six months of 2020 have driven a whopping $368.8B in online sales.
“According to our data, it would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” Vivek Pandya, Adobe’s Digital Insights Manager, told Business Insider for an article published June 12, 2020. “We typically don’t expect to see surges at this level, at any time outside of the holiday season. For context, last year’s holiday season drove $142.5 billion dollars from November 1st to December 31st, and that was a 13% year-over-year increase.”
It’s no surprise that medical supplies top the list as the fastest-growing e-commerce category during the pandemic, but many others are seeing an increase as well. Digital sales of household goods and baby products have risen more than 200%, while sales of toys, wellness products, and home office supplies have almost doubled.
Perhaps most interesting is that new customers and those with only one previous order represent the bulk of the increase in online purchases for April, May, and June. This suggests that the shift to e-commerce shopping is not a temporary change. “We’ve had three months to adjust to the new normal,” said Taylor Schreiner, director of Adobe Digital Insights. “We are seeing signs that online purchasing trends formed during the pandemic may see permanent adoption.”
All of this data points to a revealing insight: we are living through one of the most important times in the brief history of e-commerce. The coronavirus pandemic has given a turbo boost to online shopping as many brands race to build their online presence to meet this rising demand. They know if they don’t, their competitors will. As the largest e-commerce platform in the U.S., Amazon alone provides businesses access to 150 million prime members who are estimated to spend $240 billion in 2020.
Indeed, businesses with a strong Amazon presence have an advantage over those that are new to the digital giant. Building a successful presence on Amazon is no easy task. In addition to the company’s complex and ever-changing protocols, there are currently 2.5 million sellers across all Amazon marketplaces. Thus, it’s not just a matter of having your business on the platform, it’s a matter of distinguishing your brand from your competitors.
Fortunately, if your business is among those working hard to catch up to the brands currently dominating e-commerce channels, there is a way to accelerate your digital growth. Channel Key is a full-service channel management marketplace consulting agency with a proven track record of helping brands from around the world achieve measurable success on platforms like Amazon. With more than 30 years of combined experience, we’ve helped complete more than 4.5 million e-commerce transactions on Amazon, resulting in $250 million in cumulative sales.
In addition to working closely with Amazon on a day-to-day basis, Channel Key provides complete 360-degree services including:
Brand Store Creation
New Product Launches
Ad Strategy Management
Organic Search Placement
It’s impossible to predict what the future will look like post COVID-19, but virtually every economist agrees that online shopping will not only continue to grow exponentially but will become an essential source of revenue for brands. Even if traffic to brick and mortar businesses resumes to pre-pandemic rates, e-commerce platforms like Amazon are here to stay. With $700 billion on the line for this year alone, the 2020 race to digital profits is well underway. To learn more about how Channel Key can help accelerate your business to the front of the pack, contact us today for a free consultation.
Ryan Faist is the Corporate Marketing Content Manager for Channel Key. As an accomplished marketing professional, journalist, copywriter, graphic designer and problem-solver with experience on both sides of the media, Ryan is passionate about discovering creative, effective ways to help businesses exceed their marketing and communication goals.