Will E‑commerce one day rule the entire retail market space?

The e‑commerce retail plat­form is a bil­lion-dol­lar indus­try that con­tin­ues to grow at an expo­nen­tial rate. 75% of con­sumers shop online at least once a month and online retail now accounts for 11% of retail sales in the Unit­ed States. Addi­tion­al­ly, the cat­a­log of prod­ucts and ser­vices avail­able online has dou­bled sev­er­al times over the last ten years, with both small and large busi­ness­es join­ing the e‑commerce space by either using estab­lished mar­ket­places (e.g. ama­zon, eBay) or by devel­op­ing their own plat­forms. The evi­dence for the strength and reach of e‑commerce is clear. The ques­tion that now stands is how far will it go?

When the Covid pan­dem­ic first hit the glob­al mar­ket, it pro­vid­ed the cir­cum­stances for a range of exper­i­ments test­ing the strength, reli­a­bil­i­ty, and flex­i­bil­i­ty of the e‑commerce mar­ket. Demand for online deliv­ery base pur­chas­es sky­rock­et­ed as con­sumers were con­fined to their homes due to either social or legal restric­tions. This dras­tic increase in demand imme­di­ate­ly began to show flaws in the e‑commerce plat­form. Web­sites slowed or shut down as com­pa­ny servers were faced with more con­sumers than they could han­dle, logis­tics was affect­ed as trav­el and trans­port restric­tions lim­it­ed the speed and num­ber of deliv­er­ies being made, and pro­duc­tion of cer­tain goods slowed or halt­ed as all resources and man­pow­er were direct­ed to pan­dem­ic relief.

These short­com­ings were best exem­pli­fied with­in the con­sumer tech­nol­o­gy mar­ket. Retail­ers of com­put­er com­po­nents such as Nvidia graph­ic cards suf­fered great­ly, with the release of a new line of RTX 3000 graph­ic cards. The release set around the end of 2020 attract­ed great con­sumer demand. How­ev­er, both  and the large enthu­si­as­tic demand dur­ing launch caused all coun­ter­parts to become incred­i­bly over­bur­dened. The launch was very unsuc­cess­ful as retail­ers were only able to ful­fill a frac­tion of orders at a sig­nif­i­cant­ly slow­er rate. The after­math of these cir­cum­stances is still being observed to this day, with many retail­ers hav­ing no stock of prod­ucts released 6 months prior.

How­ev­er, despite these fail­ures, the e‑commerce indus­try has con­tin­ued to grow. E‑commerce News Europe found that Ger­man e‑commerce was val­ued at 83 bil­lion euros ris­ing by 14.6% from the year pri­or. In 2020 the gro­cery indus­try was one of the few indus­tries which was allowed to con­tin­ue oper­at­ing dur­ing the pan­dem­ic. This took the stress off online chan­nels and allowed gro­cery retail­ers to fur­ther devel­op and per­fect their e‑commerce pres­ence. E‑commerce now accounts for 10% of all gro­cery sales accord­ing to super­mar­ket news. With the abil­i­ty to pro­vide per­ish­ables effec­tive­ly and effi­cient­ly to con­sumers remote­ly, a large gap has been filled in the e‑commerce mar­ket. Con­sumers can now ful­fill most basic needs with­out ever leav­ing their homes.

What the COVID-19 pan­dem­ic has shown is that the e‑commerce retail plat­form still suf­fers from many weak­ness­es, that keep it from tak­ing the major­i­ty mar­ket share with­in its mar­ket. How­ev­er, despite fail­ure and loss, the con­ve­nience and flex­i­bil­i­ty of e‑commerce options con­tin­ues to attract more con­sumers. E‑commerce as a retail plat­form will con­tin­ue to grow but will still coex­ist with a phys­i­cal retail experience.

Author: Hugo Görans­son , Glasford Inter­na­tion­al Deutsch­land Research & Analytics