As Covid-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online, an additional $900 billion being spent in retail online around the world in 2020.
According to Mastercard’s latest Recovery Insights report, e-commerce made up roughly $1 out of every $5.0 spent on retail in 2020, up from about $1.0 out of every $7.0 spent in 2019.
Ability of selling online of large and small businesses provided a much-needed lifeline as in-person consumer spending was disrupted, the report said.
“Roughly 20-30 per cent of the Covid-related shift to digital globally is expected to be permanent,” according to Mastercard’s Recovery Insights: Commerce E-volution, published on mastercard.com recently.
The report draws on anonymised and aggregated sales activity in the Mastercard network and proprietary analysis by the Mastercard Economics Institute.
The analysis dives into what this means by country and by sector, for goods and services, and within countries and across borders.
“While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce,” said Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute.
“This has significant implications, with the countries and companies that have prioritised digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital,” Bricklin Dwyer added.
The report said that economies that were more digital before the crisis—such as the UK and US —saw larger gains in the domestic shift to digital that look more permanent than the countries that had a smaller share of e-commerce before the crisis, such as Argentina and Mexico. Asia Pacific, North America, and Europe were the strongest regions in driving e-commerce adoption.
“Essential retail sectors, which had the smallest digital share before the crisis, saw some of the biggest gains as consumers adapted. With new consumer habits forming and given the low pre-Covid user base, we anticipate 70-80 per cent of the grocery e-commerce surge to stick around for good,” it said.
According to the report, international e-commerce got a boost both in sales volume and the number of different countries where shoppers placed orders.
“With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25-30 per cent year over year from March 2020 through February 2021,” it said.
Reflecting expanded consumer choice, the analysis showed that consumers worldwide are making purchases at a greater number of websites and online marketplaces than before.
“Residents in countries like Italy and Saudi Arabia are buying from 33 per cent more online stores, on average, followed closely by Russia and the UK.”
Mastercard launched Recovery Insights last year to help businesses and governments better manage the health, safety and economic risks presented by Covid-19. The initiative draws on Mastercard's analytics and experimentation platforms, its longstanding consulting practice and unique data-driven insights to deliver relevant and timely tools, innovation and research.