Trendline

Share this post

E-Commerce Growth Story

www.trendlinehq.com

E-Commerce Growth Story

Sep 11, 2022
4
Share this post

E-Commerce Growth Story

www.trendlinehq.com

Today’s Topics

Hello,

Today we have 3 charts for you, all of them exploring the US-Ecommerce Industry.

  • E-Commerce Sales: Growth story is intact

  • E-Commerce Penetration: Back to its pre-pandemic long-term trend

  • Comparison with China: Lots of headroom for future growth


The performance of e-Commerce stocks has been disastrous this year. Popular stocks like Shopify, Etsy and Chewy are down 50-80% in the last 1 year.

Even Amazon’s e-Commerce sales are struggling, down 4% in Q2-22 - the stock has fared better compared to other e-Commerce companies, due to its very impressive AWS Cloud business.

So, is the long-term e-Commerce growth story dead? My answer is No.

Its no secret that e-Commerce saw an unprecedented increase during Covid-lockdown times. Looking at the above chart, in US, e-Commerce retail sales jumped from $160B in Q1-20 to $211B in Q2-20, a 32% jump in one quarter.

Over the last 2 years, even as lockdown conditions eased, total e-Commerce sales has continued to grow, @~10.4% annualized, even from the higher base in Q2-20.

Its unrealistic to expect e-Commerce to maintain growth figures from 2020 (which was an exceptional year), but the long-term growth story is very much intact - the charts below, explore this in further detail.


Thanks for reading Trendline! Subscribe for free to receive new posts and support my work.


In Q2-20, during peak lock-down, many stores were shut and people shopped a lot online, given a huge boost to e-Commerce. As offline retail sales dwindled, e-Commerce surged resulting in e-Commerce penetration (defined as e-Commerce retail sales as a % of total retail sales) increased from 11.9% in Q1-20 to 16.4% in Q2-20.

Since then, in the last 2 years, as stores re-opened slowly, and e-Commerce sales growth reduced, penetration has come down, expectedly.

However, as penetration comes down, its reverting to its long-term pre-pandemic trendline (possibly even a bit higher than that, depending on how next few quarters play out)


Comparing with other large e-Commerce markets, US e-Commerce still has a lot of runway left.

US e-Commerce retail sales in the last 12-months ending Q2-22 is ~$1T - making it the 2nd largest e-Commerce market in the world after China (~$2.9T in annual sales)

However, e-Commerce penetration in US (@14.5%) is still 3x lower than China, where ~45% of all retail sales happens online.

US e-Commerce penetration may never reach 45%, but even if it reaches as high as UK’s (@~36%), US e-Commerce sales can reach ~$2.5T annually (At current total retail sales level). That’s an addition of ~$1.5T to its current base of ~$1T/ year.

US e-Commerce industry has been one of the strongest growth industry in the last 2 decades and the 20’s decade should be no different.


P.S. There was a pause in publishing in the last few weeks, due to my annual leave. This newsletter is back to its weekly publishing cycle now.


Thanks for reading Trendline! Subscribe for free to receive new posts and support my work.


Share this post

E-Commerce Growth Story

www.trendlinehq.com
Previous
Next
Comments
TopNewCommunity

No posts

Ready for more?

© 2023 Trendline
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing