Business Musings: Consumers Jumped Across The Digital Divide (Part One)

Business Musings: Consumers Jumped Across The Digital Divide (Part One)

From the moment I started writing these weekly business blogs, I covered the attitudes of online retailers who wondered how they could appeal to customers. If the company was big, like Amazon or Walmart, consumers shopped online when they trusted the website or knew that their information would be safe.

I’m resisting the urge to put in quotes around trust and safe, because that attitude is so 2012. For a while, it was unusual for there to be any breach of confidential information on websites. Now the big guys seem to be hacked all the time, and worse, take years to tell us about it. (One reason why experts want us to change our passwords continually.)

But there was more to online shopping than that simple trust factor. In 2015, 85% of Americans had shopped online, but only 15% did so weekly. Most bought one thing annually. Back then, 59% of people 60-65 had made a purchase online, but only 17% used their cell phones or a link on social media to buy something as opposed to 77% of people 18-29 (on their phones; it’s 24% for social media).

All groups, though, reported they were rather shop in a brick-and-mortar store. They rarely windowed. They shopped in person, and ordered harder-to-find items online.

I like buying things in person too. During the pandemic, I ordered some clothes that looked pretty, but the fabric was awful—thin and see-through (not obvious on the website) and so fragile that they wouldn’t hold up to several washings. I am and have been happy to order grocery items online, but some things I want to touch, from blankets and towels to clothes and certain kinds of shoes. (I will order my running shoes online after I get used to a style. In fact, I overbuy because running shoe companies tend to discontinue or “improve” models much too quickly.)

But post-pandemic, the in-person shopping experience has been frustrating. We moved into a new condo in June, and it’s larger than the one we left. We needed a few items of furniture to round the place out. We knew about the couch shortage (and nearly got caught in it in the fall) so we asked the sales rep to show us only furniture that was in stock. The experience took nearly an hour longer than it would have in the past as he double-checked to make sure they could deliver something that week. We went through at least three different iterations of choosing, looking the item up, and then being told that one of the pieces (of a set) wasn’t available.

We also needed new everyday items like towels and some cooking utensils, so we went to a big box store. Pre-pandemic, it was overflowing with goods of all types. Now, entire sections were mostly empty, including many of the homewares. Other things (like TVs) were there as something that would encourage you to order from them.

What a difference a global pandemic makes. In fact, when you combine the pandemic with the changes we’ve seen in online ordering in the past five years, we’re not even in the same universe.

In the teens, experts in ecommerce believed that it would take forever for seniors to embrace online shopping. The theory was that seniors and the younger online resistant would come to ecommerce very slowly, at a predictably small percentage per year.

In fact, in the years between 2015 and 2019, ecommerce grew at that predictable rate. The experts believed they could map how quickly ecommerce would grow over the next decade.

Cue evil laugh. Everyone, including us, thought we could predict the future, based on the past.

The pandemic blew all of that up—and continues to lob large scale ordinance at any expectations that we have.

But I’m slowly getting a handle on what’s happening, as I think others are as well.

Let’s just talk the changes in ecommerce from the past year and what they mean for writers.

Ecommerce, as a share of overall retail sales, grew an average of 15% per year in 2018 and 2019. That was an improvement over the growth in the early part of the same decade, where ecommerce accounted for 7-8% of total retail sales.

In 2020, ecommerce as a share of retail sales grew a whopping 44%. That’s the highest growth in the past two decades, according to Digital Commerce 360.

Seasonally adjusted retail sales themselves grew an astonishing 6.9%. This figure was also adjusted to exclude things like spending at restaurants, gas stations, and auto dealers. (Although, judging from some of the data I sifted through as I wrote this, sales for auto dealers online grew as well and if you count Grubhub and other delivery services, restaurant sales online grew significantly as well.)

The growth in overall retail sales was caused exclusively by online sales. 101% of the growth in retail sales was online. (That 1% accounts for the decline in brick-and-mortar sales due to the pandemic.)

So the news is online growth. Here’s what Digital Commerce 360 says:

Online’s share of total retail sales has steadily been on the rise—with ecommerce penetration hitting 21.3% in 2020, Digital Commerce 360 estimates. That’s up from 15.8% in 2019 and 14.3% in 2018. The more than five-percentage point gain in ecommerce penetration is by far the biggest year-over-year jump for U.S. retail sales ever recorded. No other year has even reached a two percentage-point gain in digital penetration.

According to the website, it would have taken another two-plus years to reach that level of growth had we sustained the prepandemic levels.

Because of the pandemic, though, people had to learn to negotiate websites other than Amazon. In 2020, Amazon accounted for over 1/3 of all online retail purchases. But, here’s Digital Commerce 360 again:

That’s certainly a significant share of online sales growth, and one we’re familiar with when it comes to the ecommerce giant, but there’s more to the story. The 31.4% is down from Amazon’s 43.8% share in 2019…. Amazon for years (even decades) has alone accounted for much of the gains in U.S. online retail. In 2020, however, it’s clear that the pandemic pushed many more consumers online—and they didn’t all shop on Amazon.

In fact, if you exclude Amazon from the growth statistics in ecommerce, you’ll see that the top 100 retailers grew their business by 74.1% in 2020. In contrast, they only grew 49.4% in 2019.

Those are the bigger retailers—Walmart, Kroeger, and others. We already saw this from the March 31 Hot Sheet (for the publishing industry) in a previous blog, but I’ll share the quote again for you.

Peter McCarthy, director of consumer insights at Ingram Content, pointed out that the online retail marketplace has become more diverse during the pandemic, not less. People are willing to shop at many different types of stores; they pay attention to business and brand values as well as to the impact of their buying decisions on the community.

All of this dovetails with the blog I wrote about Amazon and anti-trust a few weeks ago. The giant is losing some of its clout and that should scare writers who are Amazon exclusive. (It won’t, because they’re as stubbornly resistant to facts as the folks who refuse to get vaccinated. If you don’t believe me, check some of the comments on that older post.)

I realize I threw a lot of statistics at you, but they’re important. Because the increase in online shopping is an acceleration of a trend, not something pandemic-based that will go away. Study after study after study have shown that people will not return to their pre-pandemic habits for many items. Some, for example, fell in love with online grocery shopping. Others like the convenience of shop and save services.

Sure, all of us will return to some pre-pandemic behaviors like Dean and I did for furniture and some household items, but brick-and-mortar stores have a supply problem as well. They can’t keep stock on the shelves due to manufacturing shortfalls from the pandemic and continuing global shipping problems. Most of these will abate given time, but by then, consumer habits will have changed.

They were bound to change anyway. Look at those 2015 statistics again. The 18-29 year olds were 90% online then, and that’s only increased. There’ve been significant changes in the way we order things in the past six years. More ordering off social media and on the phone.

We as a culture have grown a lot more comfortable with the online ecosystem. It wasn’t just ordering groceries online or the elderly learning how to hit refresh, refresh, refresh while hunting for an appointment in the early days of the vaccine.

It was also Zoom meetings and online parties with grandchildren. It was online school and the expansion of broadband. The upcoming generation—the 6-to-18 year old group will make the previous younger generation look as antiquated as we Boomers look to the thirty-somethings.

The key idea in all of this growth is the decline of Amazon as the go-to site, and the increased sales of the other retailers, even the small retailers.

Because not all ecommerce sites are created equal. When you go to one, you have to learn how to navigate its twists and turns, which are not the same as Amazon or as WalMart. You do need a bit of patience, and you need to deal with some counterintuitive programming.

Once you’ve done that repeatedly on different sites, you’re a lot more willing to go to sites other than Amazon. I have not seen the statistics exactly on this—I’m not sure if anyone even asked the question—but anecdotally, I know a lot of people between 30 and 70 who were willing to go to Amazon for everything because it was easy, not because they had Prime memberships or free shipping.

People were afraid to try new sites—until the pandemic forced them to.

Now that they have, though, they’re willing to order off all kinds of sites large and small, as long as there is a secure checkout and, on physical items, a way to get free shipping.

This expands opportunities for writers who have gone wide. Our books will sell more in non-Amazon sites because more people will visit those sites. But even more than that, people will be willing to shop on our websites in our stores. No middleman at all, no one taking even a small percentage.

Of course, those sales will never count toward bestseller lists or Amazon algorithms, but really, who cares? Our readers can order directly from us—and are a lot more willing to do so.

I’m seeing that with our Kickstarters. We have a lot more first-timers now. Some of that is because of what we offer, such as early releases in established series, but some of it is because people are more courageous now. They know how to negotiate new websites, how to handle any problems that arise, and how to ask for help if they need it.

Ecommerce will only continue to grow in the near future. We’re used to doing almost everything online thanks to 2020. Many of us live on our phones, and order a lot through the phone. Heck, a lot of people use their smart home device (like Google Assistant or Amazon’s Alexa) to place an order for them without even typing anything into a website at all.

In the next few blogs, I will explore some of the opportunities we writers will have because of this accelerated shift. I will also look at some ideas that I encountered why researching this piece.

There’s a lot of exciting growth going on. It’s happening so fast that it makes my head spin. But really, that’s been my reaction since the pandemic hit. I knew the culture was going to change; I just didn’t know how. Now I’m seeing things clearer.

Some things are surprising me. Others seem logical, if I just stop to look at them.

And some portend great things for the future. The increased comfort in the digital space among all age groups is one of those portents. We can see what’s coming, if we but look at what the youngest generation is doing. Because of the pandemic, that generation is living online and doing things together online.

I’ll discuss that as well. We have a lot of changes ahead. I think they’re mostly good for the adventurous writer with a good sense of business.

The future is slowly revealing itself after a year and a half in global limbo. We’re in a different world than we were ever in before, but that’s okay, as long as we remain open-minded and no longer expect things to be the same as they were pre-pandemic.

The shrinking of digital illiteracy among all age groups is one of those changes. I’m sure there will be many, many more.

*******

This weekly blog is reader supported.

If you feel like supporting the blog on an on-going basis, then please head to my Patreon page.

If you liked this post, and want to show your one-time appreciation, the place to do that is PayPal. If you go that route, please include your email address in the notes section, so I can say thank you.

Which I am going to say right now. Thank you!

Click paypal.me/kristinekathrynrusch to go to PayPal.

 

“Business Musings: Consumers Crossed The Digital Divide,” copyright © 2021 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / AndreyPopov.

5 responses to “Business Musings: Consumers Jumped Across The Digital Divide (Part One)”

  1. Paul Sadler says:

    I want to believe, but I have some niggling doubts about some aspects. I’m in Canada, so it doesn’t look the same, but a lot of the trends do, just a question of strength.

    For analysing, say 2005-2018, the pundits have said every year, “This is it! This is the year everything changes to digital!” and then it didn’t. Why? Because most of the retailers didn’t do much more than throw up a site and hope for the best. Increased, yes; tide tipping? Not so much.

    Now they look at 2019 and 2020 and point to all the changes and say “ah-hah!”. Except it’s the Black Swan event. BSEs do absolutely nothing for trends. No one can predict them, no one can base their analysis on them. We simply do not know what will happen afterwards. I feel like we need a good 18m post everything re-opened to know what people will actually do. Kind of like people who give up smoking while they’re off at a retreat or something, great, problem solved? And then the next time they’re at a bar 3m later, they’re surrounded by smokers outside, having a good drink and time, and bam, they buy a pack. We changed habits but we didn’t change their motivations that lead to the habits, we just denied them. Cutting me off books if I don’t have a store or KIndle access doesn’t stop me from being a reader. I just need access again to what I used to have, and I’ll go right back to it. I have studied “change” and “habits” way too much to believe our behavioural economics got nudged permanently. I hope, but I doubt.

    I’ll use an example from my own city. Guy I know runs a shoe store for kids and he specialized with custom fits, hard to find options, very heavy on the service side. Before pandemic, he employed 17 staff to handle the volume; throughout pandemic, it’s been rough for him. A LOT of shutdowns, door pickups only, etc. He’s down to about 7 staff and can’t give them all enough hours. Rough go. But when everything opens, he’ll be back up and running. Exactly how he was.

    Meanwhile, he has 1 buddy who runs a couple of takeout businesses. Through pandemic? Booming. Two more buddies own grocery stories. Also booming. Four times the volume they would normally do through a non-pandemic year in some aspects of their store. Awesome, right?

    But when it comes back to open economies, they know their business will crater in comparison while the shoe guy booms.

    People aren’t going to stay at home. They’r egoing to go to restaurants again. THey’re going to stop on the way home at the nearby store and pick something up. They’re going to grab stuff at Walmart while they’re waiting between swim heats at the local sports plex for their kid. Tons of stuff they DON”T do now in person will go back to being in person because they can.

    Groceries? I’ve crossed the rubicon, I’ll likely keep doing it online. But we’ll go back to restaurants. We’ll go back to shopping in stores. We’ll go back to browsing for clothes because the transaction cost of trying something on at the store is less for me than the transation cost of having to return a bunch of crappy stuff that was too thin, too small, too itchy, too scratchy, too “blech” after I ordered it. My wife orders lots of things online and then returns them in an outing once a month. Me? I’d rather go to the dentist than deal with returns.

    Like I said, I want to believe. I just don’t trust people being forced into one behaviour when nothing else is available means they have “committed” to it enough to predict the future. I won’t feel confident of new trends probably until June 2023. Particularly when other businesses have decided if they are 100% remote or back to “in-person” again. I’d feel more confident if lots of industries were committing to full remote work, but most of them aren’t…

    It will be cool to see which elements hold…

    Paul

  2. Widdershins says:

    I’m certainly shopping online across a variety of sites far more now than I did in 2019.

  3. David Ai says:

    I just learned today (I might be a bit slow to this’news’) that Barnes and Noble are accepting books from international authors. Previously Nook was only for North America and other countries were out in the cold. So going wide is even more of an option now.

    https://press.barnesandnoble.com

  4. People are very much more willing to buy from small retailers.

    In 2019, direct sales (including sponsorships) were about 18% of my income (https://mwl.io/archives/5164). My 2020 income was higher, and direct sales were about 25% of it (https://mwl.io/archives/9778).

    Yes, yes, one guy’s two data points is not real data, but it echoes your research.

    Overall, I’ve squeezed Amazon down to less than 40% of my income. Losing it would kind of suck, sure, but it would be survivable.

Leave a Reply