As COVID-19 Continues, Online Commerce Rises
Earlier this year, DisCo covered the large rise in digital commerce due to many businesses’ actions in response to the COVID-19 pandemic. In that post, we detailed efforts that firms have undertaken to serve their customers safely and function in an increasingly digital manner. As businesses changed strategies to tackle what we referred to as a “shut-in economy”, there was a drastic increase in hiring and a prioritization of digital commerce. Since then, businesses across the economy have further strengthened their digital presences (and their physical support systems) and e-commerce sales have further increased since Q1 of 2020.
When we last looked at this trend of increased focus on e-commerce, many businesses were hiring new employees to handle the increase in digital commerce. On top of earlier rounds of hiring, job creation has continued throughout the recent months. Amazon hired 400,000 this year alone to bring its total employees number to over 1 million. By mid-July, Walmart reported it hired more than 400,000 new associates. Target plans to hire 130,000 more seasonal workers. Since the earlier phases of the pandemic, 7-Eleven estimates it has hired over 50,000 new workers and is planning on hiring 20,000 more. CVS announced that it’s hiring for more than 15,000 new jobs. The list of businesses — retailers foremost among them — that are hiring right now continues to grow, demonstrating that while challenges remain in the broader US economy, the diverse resiliency in retail remains a bright spot of 2020
The increase in workers is not the only data point indicative of the increase in digital commerce. Holiday shopping for occasions such as Black Friday, Small Business Saturday, Cyber Monday, and the mounting Christmas shopping are also reflective of this trend. McKinsey predicts that many consumers across the world have altered their shopping habits more permanently to reflect the increase in digital commerce. Retailers are experiencing a holiday shopping boom, with a 35% increase in e-commerce sales. While e-commerce surges forward, traffic in stores during this shopping season on days such as Black Friday fell a drastic 52%. While the safety guidelines and practices to support e-commerce such as curbside pickup and free 1-2 day delivery that many stores have enacted remain in effect, days where in-store shopping is the norm also appear to be on the downturn. Further, the gains from digital commerce are even predicted to offset the losses from in-store holiday sales.
A recent Morning Consult study highlighted how nearly half of all shoppers are planning to shop online this holiday season and while many larger, more recognizable brands are benefitting from consumer familiarity, over half of shoppers also plan to explore new brands more than usual as they search for products. It’s likely that omni-channel retailers will come out strong as McKinsey predicts a shift in consumer behavior, arguing that shoppers are looking to multiple channels for gift inspiration.¹
Despite headlines claiming this trend has benefitted select online enterprises, traditional retailers embracing the shift to online have been rewarded for it: Kohls’ e-commerce sales represented 32% of the retailer’s total sales in Q3, increasing by 25% year over year. Walmart’s online sales rose by 97% in Q2 and 79% in Q3. Home Depot also reported strong Q3 earnings and CEO Craig Menear said digital sales rose 80% year over year. Target reported a 195% growth in digital sales in Q2 and while that number dipped in Q3 to 155% it has still seen massive growth overall. Furthermore, while some believe only larger retailers are receiving the benefits of increased e-commerce, consumer interest has grown in a wide range of companies.
The above data indicates that digital sales will continue to grow and e-commerce is steadily earning more for retailers over time. At the start of this pandemic, many firms began to increase their hiring initiatives and prioritize their digital presence and e-commerce efforts. These firms have since seen positive growth as a result. As such, these actions will likely continue into the future as a more permanent shift in commerce.
¹ For more information on omni-channel retailers you can read our other blog post Retailers, Advertisers, and Advertising Services