On the surface, 2020 looked like an especially strong year for the ecommerce industry. Projected retail ecommerce sales in the United States grew by an incredible 32.4% to $794.50 billion.
But these figures must be put into context: Unprecedented factors caused much more ecommerce growth this year than can be expected in the coming years.
Below, we’ll review the 2020 trends that were likely short-term aberrations, as well as the trends that should stick around for 2021 and beyond.
Of course, 2020 will be remembered as the year of COVID-19. The global pandemic affected nearly all aspects of everyday life, from work to spending time with family to entertainment and leisure.
To slow the spread of COVID-19, lockdown orders were issued all around the world. Social distancing was highly recommended, if not enforced. And with people unable to leave their homes for nonessential reasons, countless brick-and-mortar businesses were forced to close their doors.
Unsurprisingly, physical retail’s loss was online retail’s gain. Consumers may not have been able to dine out at a restaurant, but they could use a food delivery app to have a meal sent to their home. They may not have been able to visit a store in person, but they could still order whatever they needed through online marketplaces like Amazon.
This is what led to ecommerce’s explosive growth rate this year. Back in February, before the pandemic had made much of an impact on the U.S., eMarketer projected the industry would grow 13.2% to $674.88 billion in retail sales.
A few months and hundreds of thousands of confirmed COVID-19 cases later, eMarketer had to make significant adjustments to its projections — adding over $100 billion in extra ecommerce sales and more than doubling the annual growth rate.
COVID-19 did not affect every part of the ecommerce industry equally, as the online sales for some items soared while the sales for other items fell. And there were trends that had nothing to do with the pandemic at all.
We’ll go over these individual trends in more detail below.
Earlier this year, we highlighted that the growth of online grocery shopping was one of the most significant ecommerce trends of 2019. This trend was even more significant in 2020 — indeed, it very well may have been the biggest ecommerce trend of the year.
While grocery stores were one of the few businesses that did not need to close during lockdowns, many people still preferred to practice social distancing by ordering their groceries in. And as we touched on above, most restaurants had to switch to an online order-only model for at least some portion of 2020.
Again, online food and beverage sales were already growing before COVID-19, with eMarketer predicting a healthy growth rate of 23.4% in its January 2020 forecast. But the post-pandemic projections absolutely sent this growth rate through the roof, as eMarketer is now projecting online food and beverage sales to grow by a whopping 74.0% compared to last year.
Online food and beverage sales were so strong in 2020 that the supermarket chain Kroger became one of the top 10 ecommerce companies in the United States, bumping Costco to the No. 10 spot and knocking Macy’s off the list entirely.
Speaking of Macy’s, an increased demand for grocery delivery isn’t the only reason why the company fell off that top 10 list. Another factor that dragged down the performance of Macy’s, as well as many other similar businesses, is that the COVID-19 pandemic resulted in a huge decline in footwear and apparel sales.
After all, if you rarely leave the house, what’s the point of buying new clothes?
This is one of the trends that you can expect to be reversed once the pandemic is no longer a pressing threat. However, with the rise in remote work (even for previously full-time, in-office positions), it's possible that the sale of businesswear might not return to its previous numbers.
Families stuck at home had to invest in technology (video games, subscription video streaming services) to keep themselves entertained. Plus, many workers had to buy telecommuting equipment in order to keep collaborating with their colleagues when their offices were closed.
Altogether, COVID-19 generated $29.3 billion in additional consumer electronics ecommerce sales. And with many employers and workers realizing that they prefer at-home work over going to the office, this trend just might continue for a while.
As mentioned in Forbes, interactive product demos were another top 2020 ecommerce trend.
This makes sense given that in-store shopping has always held a big advantage over online shopping: Many consumers like being able to see and touch items before they commit to buying them. Offering 360-degree product views to visitors helps ecommerce merchants overcome this disadvantage.
In 2020, consumers were surely extra appreciative of this feature, considering the limited number of in-store shopping opportunities. Today, as stores reopen but potential health risks still abound, expect customers to continue leaning into interactive demos and product views to avoid gathering in crowded spaces.
The pandemic may have led to growth in the ecommerce industry, but it caused a severe contraction in the overall economy.
With less revenue coming in, businesses were forced to find ways to reduce their spending. This led to marketing budgets everywhere getting a serious trim.
Globally, according to Market Dive:
The only form of advertising that didn’t see a reduction in spending was online ads. In fact, there was even an increase in the spending on online video ads.
Another big story in online advertising is the sudden popularity of TikTok and the opportunity that this presents to ecommerce merchants.
In case you’re unfamiliar, TikTok is a short-form video sharing app. It was originally only available in China, but it was released worldwide in 2018 — and in 2020, the app really caught on in the West.
There are now over 60 million monthly active TikTok users in the United States, as well as over 800 monthly active users worldwide. It’s important to note that TikTok’s audience is disproportionately young (in the United States, over 60% of TikTok users are between the ages of 10 to 29), so this channel is especially worth exploring if you sell products such as video games and trendy clothing, for example.
And in October 2020, TikTok and Shopify announced a partnership that makes it easier for Shopify merchants to make sales through this platform. With the Shopify App Store’s free TikTok plugin, users can set up TikTok ad campaigns and track performance directly from their Shopify account. The app even provides a $300 advertising credit to get you started on your first campaign.
TikTok isn’t the only social media platform that ecommerce merchants can use to generate sales. Social media companies have long offered features for ecommerce, such as Instagram’s shoppable posts. And in 2020, these companies added even more ecommerce features.
For example, Facebook recently introduced multiple new features for online shopping, including:
Pinterest released plenty of new shopping features as well:
You can expect social media companies to continue expanding their integrated ecommerce functionality in 2021 and beyond.
Did COVID-19 create a “new normal” for the ecommerce industry, or will everything go back to the way it used to be once the pandemic is over?
The answer, of course, lies somewhere between these two extremes. Looking at the projections, it appears that there will be an across-the-board dip in the ecommerce growth rate in 2021 — this was somewhat inevitable, given how much the industry grew in 2020.
And yet, the post-pandemic projections also show that total ecommerce sales in 2022 and 2023 will be significantly higher than they were expected to be pre-pandemic. In other words, COVID-19 seems to have jumpstarted the industry as a whole, concentrating several years of growth into a single year. Perhaps now that people have gotten used to the convenience of ecommerce for more of their purchases, they’ll find it difficult to drag themselves to the store again once there is no longer a need for social distancing.
For those reasons and more, the future of ecommerce looks very bright indeed.
Adam Ritchie is a writer based in Silver Spring, Maryland. He writes about ecommerce trends and best practices for Shogun. His previous clients include Groupon, Clutch and New Theory.