Economy

Mastercard’s report says consumers spent an additional $ 900 billion online in 2020

Mastercard's report says consumers spent an additional $ 900 billion online in 2020

Consumers around the world spent an additional $ 900 billion on online retailers in 2020 compared to the trend of the previous two years, according to a report released Tuesday by the MasterCard Institute of Economics.

Shoppers return to restaurants and return to stores to personally purchase clothes and shoes. However, they will still stock up on their refrigerators and look for good deals online – a sticky habit that arose during Coronavirus disease pandemicAccording to the report.

Sales of nearly every online retailer jumped as shoppers were stuck at home. Because consumers chose online purchases in the parking lot and received packages or take-out orders at their doors, e-commerce accounted for about 1 dollar of every $ 5 spent on retail globally. This is an increase from about $ 1 in every $ 7 spent in 2019, the report said.

In an interview on CNBC “Worldwide exchange” With Frank HollandMastercard’s chief economist, Bricklin Dwyer, said that about 20% to 30% of the additional $ 900 billion digital spending will continue into 2021 and the next few years.

However, the long-term gains from e-commerce will be uneven and will depend on what the retailer sells, how they have adapted their business model and how consumers prefer to shop. For some merchandise, such as clothing, shoppers may prefer to return to traditional stores where they can try on an outfit before purchasing it. In some retail segments, such as electronics, online purchases actually drove a larger share of total sales, so there was less room for growth.

According to the report, grocery and discount stores will experience the most dramatic and lasting transformation in e-commerce. Discount stores include dollar stores, wholesaler clubs, and other retailers that sell to customers at prices close to the wholesale. The report said grocers are likely to retain about 70% to 80% of the digital sales gain they saw during the height of the epidemic, and discount stores will retain about 40% to 50% of it.

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For both sectors, online sales accounted for only one-digit share of total sales before the pandemic – creating an opportunity for significant growth.

Clothing stores, restaurants, and sports / game stores saw the largest initial spike during the pandemic, but only kept 10% to 20% of peak sales, according to the report.

Electronics stores and supermarkets had the highest penetration of online sales before the pandemic, with e-commerce accounting for about 55% to 60% and 40% to 50% of their total sales, respectively, according to Mastercard. For the two sectors, the expected permanent shift will be around 20% to 30% of the jumps peak.

Dwyer said grocers face unique hurdles – even as more consumers shop online for products, meats, and other ingredients. He said that only about 10% of all spending on groceries is through e-commerce.

He said, “You have to trust someone else to pick your peaches.” “You have to trust someone else deliver your goods and still have good when it arrives. So these are really some of those barriers that we cross.”

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