What Will the E-Commerce Sales Channel Look Like on December 31, 2020?

In this year of twists and turns it’s hard to predict what the rest of the 2020 will bring.  But, as Q2 winds down, we need to take a hard look at what may be in store for the E-Commerce Sales Channel.

In 2019, E-Commerce accounted for 17% of all retail spending.  Prior to the Pandemic, E-Commerce spending was expected to be around 20% for 2020. However, due to COVID-19, this number has jumped to 25%. It will surely continue to grow in the second half of the year. 

How will sales be impacted for your business over the next six to twelve months?

Last week, my business partner and I were on a call with a prospective client.  As part of our conversations the company asked us to give them an estimate on how much our firm would be able to grow their E-Commerce business for the rest of 2020 and all of 2021. The company clearly stated their goal was to double sales at their current rate. This figure included the increase due to COVID-19. 

We can all agree COVID-19 has had a very big impact on E-Commerce sales.  In fact, we have one client that did a year’s worth of business in the month of May alone.  However, to think the Stay At Home level of sales will become the new norm is a pipe dream. The immense spike in sales is not sustainable in the long run.  It was an anomaly. 

Sales for June have already begun to soften.  A more reasonable expectation is to plan for 30-40% growth for the next 18 months. 

Let me explain.  

COVID-19 changed the growth trajectory of E-Commerce.  The jump in market share from 17% to 25% in just six months fully illustrates this fact.  In an earlier blog I predicted that the Pandemic would catapult E-Commerce Sales by five years.  

I still believe this.  However, I don’t believe the sales we saw from March to May are the new norm.  Instead, the E-Commerce Sales Channel is in the midst of a reset.

What we do know is that consumers will continue to shop online in greater numbers.  The great unknown is how long will it take before E-Commerce represents 50% of the market share on an ongoing basis.  

In my opinion, the E-Commerce Sales Channel will be at that 50% in the year 2025. Prior to COVID-19, I would have estimated that in 2030 E-Commerce would make up 50% of all retail spending.

So, back to how do suppliers plan for this growth and not miss the opportunity.  Budget for a 30-40% increase year over year for 2021. However, back out the huge bump in sales for the months of April and May.  Instead take your 2019 sales and increase them by 30%.  This will give suppliers a much more realistic baseline.  

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