E-Commerce: How consumers spent $900bn online in 2020 ─Report

*Leading payment firm Mastercard relates how the novel Coronavirus (COVID-19) pandemic sped up the adoption of e-commerce to the tune of US$900billion in the past year

Isola Moses | ConsumerConnect

Payment Digital payment giant Mastercard in a new report underscores just how dramatically the retail environment changed in 2020 year in the heat of the Coronavirus (COVID-19) pandemic.

ConsumerConnect learnt the findings indicated that consumers’ online spending got a $900 billion boost in the last year.

In further analysis of the consumers’ spending online, about US$1 of every US$5 that consumers spent in the year was spent with an online retailer.

Bricklin Dwyer, Mastercard’s Chief Economist and Head of the Mastercard Economics Institute, said: “While consumers were stuck at home, their dollars travelled far and wide thanks to e-commerce.”

Dwyer stated that the numbers have significant implications, and perhaps sped up a trend that would have played out over time.

According to Mastercard chief, the online spike in spending prodded some smaller businesses to embrace e-commerce, something that will make them stronger in the long-run.

“Our analysis shows that even the smallest businesses see gains when they shift to digital,” Dwyer said.

In stressing that the observed changes may be lasting, Mastercard noted that some of that e-commerce business is not returning to brick-and-mortar stores. Mastercard estimates that as much as 30 percent of the shift to digital channels, caused by the pandemic, is expected to be permanent.

The wide-ranging report uncovered some other observations, in which the authors said the pandemic instigated several consumers to expand their footprints and buy from a wider variety of online merchants.

It was gathered that many shoppers might have done the bulk of their online ordering with Amazon in the past, but they expanded the number of online stores they used by up to 30 percent in 2020.

The damaging pandemic also changed the way consumers paid for purchases, according to report.

They abandoned cash and significantly increased their use of digital payments channels, which is considered a move accelerated by a coin shortage over the summer in some countries.

The authors further wrote in the report: “According to our analysis of payment forms at brick-and-mortar retail stores and restaurants, we saw non-cash payments jump by an additional 2.5 percentage points beyond the ongoing trend.

“This led to an acceleration of the shift from cash to electronic payments by a full year.”

In another trend that the report predicts will be lasting, consumers increased their use of e-commerce purchases of food.

The report suggests that up to 80 percent of this increase will be permanent in the years ahead.

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