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Tuesday, November 17, 2020

Online sales continue to soar

The COVID-19 pandemic has sent millions of consumers online for purchases they had been making in-store. Now, a new report from Juniper Research suggests online buying isn't just a fix for a temporary situatoin, but a long-term trend.

Juniper expects transaction values for online sales of physical goods to surge 33 percent between now and 2025. By the time the books are closed on 2020, the U.K.-based research firm said, ecommerce sales of physical goods, worldwide, will total $3.3 trillion in 2020; that total will swell to $4.4 trillion in 2025.

Juniper also expects OEM pay schemes (smartphone-based wallet schemes such as Apple Pay and Google Pay) to be a major contributor to this growth, with purchase volumes for remote goods purchases expected to grow 730 percent globally between 2020 and 2025.

"The pandemic has fundamentally altered customer behaviors towards ecommerce, with these behaviors likely to be sustained in the longer term," Juniper said in a press statement.

This is no outlier view, as evidenced by a recent earning report out of retailing giant Walmart, which saw triple-digit growth in ecommerce sales for the three months ending Sept. 30.2020. Walmart U.S. ecommerce sales grew 79 percent for the quarter, after rising 97 percent in the second quarter. Third-quarter ecommerce sales at Sam's Club, Walmart's membership warehouse club, grew by 41 percent, the company said.

"We think these new customer behaviors will largely persist, and we're well-positioned to serve customers with the value and experience they're looking for," Doug McMillon, Walmart's president and CEO, said in a statement.

One strategy Walmart is taking to further boost online sales is going toe-to-toe with ecommerce giant Amazon.com. In September, Walmart introduced Walmart+, a new membership program intended to compete with Amazon Prime. Walmart+ comes with free shipping on more than 160,000 items, including groceries. The program is priced at $98 a year, compared to $119 for Amazon Prime, but unlike Amazon Prime, Walmart+ requires a minimum order, $35, to qualify for free delivery, and it doesn't come with free video streaming, a popular feature of Amazon Prime.

Ecommerce no longer a niche

In the 25 years since Amazon.com sprang onto the scene, ecommerce has grown from being a niche channel favored for purchases of books, music and electronics, to a must-have shopping alternative. According to data compiled by the U.S. Department of Commerce, roughly 16 percent of total retail sales in the second quarter 2020 occurred online, a 44.5 percent jump over the same quarter in 2019.

Now, as consumers adjust to a world where health risks like COVID-19 make shopping from the comfort of home a safer alternative, ecommerce is poised to chart continued stellar growth, the technology firm Nasdaq wrote in a recent report. "In the medium term, ecommerce's next wave of growth is likely to come from greater penetration of retail categories that historically lagged, like groceries, health and autos," Nasdaq stated.

Surveys of grocery shopper habits, conducted by the Food Marketing Institute, illustrate this. Prior to the pandemic, 14.5 percent of grocery shoppers reported going online for at least some purchases; in March and April it was closer to 28 percent, according to the 2020 U.S. Grocery Shopper Trends report. end of article

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