Why Has The eCommerce Bubble Not Burst?

Power Retail’s latest fortnightly report found that July e-commerce revenue experienced 11 per cent growth year-on-year.

Similarly, August is forecast for $4.86B in e-commerce revenue, which represents further growth on top of 2020 levels.While some have recently reported that the e-commerce bubble has burst and that the ‘worst is yet to come’ for the retail sector, this is not the case.

Natasha Sholl, insights editor at Power Retail (pictured) said, “while there may be evidence of a dip in retail overall (reportedly 1.8 per cent) we can see that when we look specifically at the digital space, online retail has experienced growth.”

“The total value of retail may be impacted by rolling lockdowns in NSW and Victoria, but the flip side of this is that reliance on e-commerce has increased. Our research found that 81 per cent of Aussie online shoppers plan to spend the same or more online next month, with only a small minority planning to decrease their online spend. Consumer confidence is high.”

Furthermore, the data found that almost half of all respondents with the intent to spend more online (48 per cent) say this is related to avoiding COVID-19. More than a quarter (27 per cent) say they are heading online because they are only going in-store for essentials.

Perhaps giving further insight into the current landscape, 20 per cent of respondents say they are shopping more online because the physical stores they normally shop at have closed (up from 7 per cent in January 2021). Interestingly, despite the clear impact of the pandemic on how consumers are shopping, the number one reason for heading online is to take advantage of bargains (62 per cent).

Sholl continued, “We can see that while there was a slight dip in e-commerce growth in May, this quickly stabilised. Online retail experienced growth year-on-year for both June and July (11 per cent), with further growth forecast for August ($4.86B).”

“While September is set for a slight dip month on month (to $4.73B) this is in keeping with the general pattern of online spend across the year and still represents growth on top of 2020 levels. Consumers may have been pushed online last year out of need, but this has shaped long-term consumer behaviour. The pandemic may have been the original driver, but convenience, pricing and a general shift in how shoppers purchase means that heading online has become a choice rather than need.”

Other insights from the latest research report also found that:

Google Ad spend is 48.8 per cent up year-on-year. This increase may be related to online retailers looking for cut through amongst the EOFY sales season and lockdown competition.
Fashion is still the most popular purchase category, though we have seen a slight rise in House purchases as well as Food and Drink products online which may be connected to lockdown purchase behaviour.
BNPL as a payment method (14 per cent) has decreased slightly in July.
We have seen a general trend that product search beginning on Google is declining. This has dropped from 56 per cent in May to 51 per cent in July. This drop in Google search is in direct correlation to an uptick in marketplace search, which increased from 16 per cent in May to 23 per cent in July

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