golden age for e-commerce appeared to be dawning. Optimistic investors, convinced that shoppers would keep buying on the internet, lifted valuations of e-merchants to frothy heights. Retailers old and new raced to expand delivery networks.
Today those heady days look like a distant memory. On August 3rd Amazon, the world’s largest online retailer, reported 11% year-on-year growth for the second quarter of the year, excluding its cloud-computing division. That was better than expected—and provoked a roughly 10% jump in the company’s share price.
Yet it was a fraction of the 42% sales growth that Amazon reported for the same quarter in 2020, and slower than the giant’s pre-pandemic trend. The same day Wayfair, an online purveyor of furniture that surged amid covid-19, reported its ninth consecutive quarter of declining sales. A slowing economy is only partly to blame for the reversal.
After spiking in early 2020, the online share of retail spending in America has remained stagnant at around 15%, roughly what it would have been had the pre-pandemic trend continued uninterrupted (see chart). The story is much the same in Britain, France and Germany, according to figures from Euromonitor, a market-research firm. In certain categories, including clothing and furniture, e-commerce penetration in America has tumbled from its pandemic peak, according to TD Cowen, an investment bank.
Consumers have flocked back to physical stores to inspect their dresses and dressers in person. The share of American grocery shopping online, which jumped from 4% in 2019 to 7% in 2020, is still edging up—but at a statelier pace. Last year it reached 9%.
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