Did The Pandemic Just Prove That E-Commerce Has A Ceiling?

Published On: April 1, 2022By Categories: Short Read

Yet more evidence, in this WSJ article, that the DEMAND FOR BUYING THINGS ONLINE might be approaching a ceiling. Remember all of those bold proclamations at the beginning of the pandemic about how ten years of e-commerce growth will happen within the space of six months? About how we had all learned to shop online and there’s no going back? Well, according to the U.S. Census Bureau, its market share rose by only 150 basis points from 1Q 2020, when it constituted 11.4% of total retail sales, to 4Q 2021, when it accounted for just 12.9% (even amidst the omicron surge). Which is quite telling: if e-commerce was ever going to seize control of retail trade once and for all, it would have happened these past two years, amidst all the stay-at-home orders, capacity restrictions and fear of indoor spaces. BUT IT DIDN’T. After a steep initial rise to 15.7% in 2Q 2020, consumers have been steadily returning to pre-pandemic habits. Today, while it might be hard to believe, 87% of retail sales still take place in physical stores – well over 90% if one includes online orders that were picked up in-store or curbside. Those of you who follow my posts will know that I have been screaming this from the rooftops since the beginning – I say (scream) it again here not as some sort of vindication, but rather, to suggest that maybe some of the other received wisdoms of the moment might also prove to have been overstated. Is the “Great Resignation” a permanent thing? Did it ever really happen at all? How about remote work? Will that endure? The anemic return-to-office levels in major markets is worrisome, yet I’m still not quite ready to sound the death knell for office space (or the Downtowns with a lot of it), not when we remain in a labor shortage and workers hold all the cards. My larger point: especially at this moment in history, when so much seems to be in flux and contingent on the vagaries of human psychology, A BIT OF CIRCUMSPECTION is warranted among the chattering classes. As Mark Twain famously said, “it ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”

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