Mastercard’s "Recovery Insights" report looks at how COVID-19 contributed to retail's digital acceleration, how much of that digital spending will be permanent, and the impact to the globalization of e-commerce.
According to Mastercard’s "Recovery Insights: Commerce E-volution"report, an additional $900 billion was spent on retail e-commerce around the world in 2020 as a result of the COVID-19 pandemic, pushing consumers to purchase goods online. In other words, e-commerce made up roughly $1 out of every $5 spent on retail, up from about $1 out of every $7 spent in 2019.
The analysis dove into what this means by country and by sector, for goods and services, and within countries and across borders.
According to the new report, roughly 20%-30% of the COVID-related shift to digital globally is expected to be permanent.
“While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce,” said Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “This has significant implications, with the countries and companies that have prioritized digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital.”
While the digital transformation has been neither universal nor consistent — due to geographical, economic and household differences — the report uncovered key overarching trends. In particular, the report found that the two retail subsectors that have historically had some of the lowest e-commerce penetration globally are rapidly shifting more online: grocery and discount stores. These essential retail sectors saw some of the biggest gains as consumers adapted to e-commerce for their everyday needs.
Less than 5% of grocery shopping was done online before the crisis. Once the pandemic hit, though, many retailers expanded click-and-collect operations, which enabled contact-free shopping without the steep logistical delivery costs. With new global consumer habits forming and given the low pre-COVID user base, Mastercard anticipates that 70%-80% of the grocery e-commerce surge will stick around for good.
With discount stores starting the crisis with an online share under 10%, Mastercard expects about a 40%-50% permanent shift to e-commerce.
Other key overarching trends:
Early digital adopters go into overdrive: Economies that were more digital before the crisis — such as the United Kingdom and United States — saw larger gains in the domestic shift to digital that look more permanent than the countries that had a smaller share of e-commerce before the crisis, such as Argentina and Mexico. Asia Pacific, North America and Europe were the strongest regions in driving e-commerce adoption.
International e-commerce rose 25%-30% during the pandemic: International e-commerce got a boost both in sales volume and the number of countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25%-30% year over year from March 2020 through February 2021.
Consumers increase their e-commerce footprints, buying from up to 30% more online retailers: Reflecting expanded consumer choice, Mastercard’s analysis showed that consumers worldwide are making purchases at a greater number of websites and online marketplaces than before. Residents in countries like Italy and Saudi Arabia are buying from 33% more online stores, on average, followed closely by Russia and the United Kingdom.
The shift to electronic payments accelerated in the United States: Even in stores, COVID-19 accelerated the transition to digital, with more consumers moving from cash to touch-free payments. According to Mastercard’s analysis of payment forms at brick-and-mortar retail stores and restaurants, noncash payments jumped 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.
Mastercard launched Recovery Insights last year to help businesses and governments better manage the health, safety and economic risks presented by COVID-19.
The latest report draws on anonymized and aggregated sales activity in the Mastercard network, and proprietary analysis by the Mastercard Economics Institute. The institute analyzes macroeconomic trends through the lens of the consumer. A team of economists, analysts and data scientists makes use of Mastercard insights, including Mastercard SpendingPulse, and third-party data to deliver regular reporting on economic issues for key customers, partners and policymakers.
Purchase, New York-based Mastercard is a global technology company in the payments industry that has connections across more than 210 countries and territories.