Image: rupixen.com via Unsplash
Business as unusual in 2020 has every indication of becoming business as usual in 2021, at least for e-commerce players. And for them, that’s reason to uncork the champagne.
Year-end results from some of the largest e-commerce players showed masses of consumers moving outside their comfort zones and deeper into online shopping habits. And not only in established markets.
Amazon’s U.S. sales soared by 36% last year to top $263 billion, as people ventured online to sate their lockdown appetites amid the pandemic. The e-commerce giant, which now accounts for almost a third of the online shopping market in the U.S., also reported its largest-ever quarterly revenue at $125.56 billion.
As earnings reports from other retailers start to come through, it is becoming clear that Amazon is far from the only industry player to have benefited from the unusual way 2020 unfolded. Companies across the board – seemingly irrespective of geography – are reporting similarly stellar results for their online businesses.
In the UK, online fashion store ASOS saw its domestic sales rise by 18% year-on-year to £1.18 billion, according to the brand’s full year financial statement. Fellow fashion e-retailer Boohoo registered 40% growth in the four months leading up to December 31st.
Retailers selling food and other essentials online fared particularly well during the pandemic. Walmart’s online sales shot up by 79% year-on-year in the fourth quarter to claim an increased share of its $134.7 billion revenue. Ocado also saw its sales cross the £2 billion mark, with revenue at its UK logistics and services arm rising 13.6% to £654.3 million.
Results like these underscore the accelerating impact the pandemic has had on digital adoption in developed markets. More striking, however, is that the same trends are appearing in far less saturated e-commerce markets – but there, these changes are even more pronounced.
Russia is a case in point. Ahead of the pandemic, e-commerce accounted for just 7% of the nation’s retail sales. Considering the vastness of the country and the accompanying logistical challenges, this is perhaps unsurprising. Western industry behemoths, Amazon included, have largely hesitated to venture into the world’s largest country, which spans 11 time zones.
For those domestic players currently dominating the Russian e-commerce market, 2020 proved a show of strength and a testament to the region’s future potential.
Ozon, Russia’s leading multi-category e-commerce player, reported an eye-watering 140% year-on-year jump in Gross Merchandise Value (GMV) in 2020, as the country’s e-commerce penetration rose to 11%. CEO Alexander Shulgin said he’s “very confident about the outlook for Ozon and for Russia’s e-commerce market as a whole in 2021 and beyond.”
A more granular look at Russian retail shows that in addition to the multi-category e-commerce players, food retailers and those selling consumer electronics and home appliances online have leaped ahead the most.
According to Infoline, annual turnover for the entire Russian e-grocery market increased by 3.6 times in 2020 to RUB 155 billion, with Russia’s largest food retailer X5 Retail Group claiming a 13% market share. X5 retained its status as the country’s number one digital food retailer, as its GMV rose 347% on figures from the previous year.
M.Video-Eldorado Group, Russia’s largest consumer electronics retailer, saw its total online sales more than double to RUB 300 billion in 2020 and reach 59.5% of total sales. Strong online results supported the retailer’s overall performance, with GMV rising 15% to exceed half a trillion roubles in 2020.
Now acclimatised to an online-first world, consumers are likely to stick with such habits even after vaccine rollouts allow for brick-and-mortar stores to reopen around the world.
The pandemic has permanently changed the shopping habits of two in five consumers, according to a new survey by NatWest and Retail Economics. During 2020, almost half of consumers (46%) made a new online purchase that they only previously made in-store, Retail Times reported, citing the survey, which focused on developed e-commerce markets.
These trends are even more pronounced in places where e-commerce adoption was relatively slow until last year. Consequently, even the companies that are already active in the digital space are ramping up investment to prepare for this new normal.
Tinkoff, Russia’s largest digital banking disruptor, has launched Tinkoff Checkout, a “one-stop shop” solution designed for businesses to accept payments online. “The launch of Checkout is a natural step for Tinkoff, given the growth of the e-commerce market, which has accelerated during the pandemic,’’ according to Sergey Khromov, Tinkoff Checkout’s head.
Russia’s tech giant Yandex, which already has a thriving express grocery delivery business called Yandex Lavka, is set to spend $400-$500 million on an e-commerce push in 2021.
Consumption is naturally habit-forming. Shoppers return to what works, while approaching untested offerings with wariness. The latest switch to new e-shopping habits shows every sign that it is going to stick.
And it’s only just the beginning. After such a jump in scale, an e-commerce revolution is all the more likely to scale up to a whole new level of business as unusual.
