Mastercard has released a new Recovery Insights report that reflects the world’s migration to online shopping venues during the pandemic. The report found that online retail spending was up an astonishing $900 billion in 2020, accounting for approximately 20 percent of all retail spending ($1 out of every $5) after accounting for only 14 percent ($1 of every $7) in 2019.
Much of that commercial activity will remain online even after COVID-19 starts to subside. Mastercard predicts that anywhere from 20 to 30 percent of that shift will become permanent, as consumers embrace the convenience of online shopping options. However, the company noted that that number could vary by region. Countries that had a strong digital economy before the pandemic (such as the US) are more likely to retain their online customers than countries that had less robust digital infrastructure.
The same is true with regards to different industries, with groceries expected to have a particularly high online retention rate. Up to 80 percent of the grocery money that went online in 2020 will still be spent online after the pandemic.
International e-commerce was up between 25 and 30 percent overall, while individual consumers started spending money at a larger number of outlets. People also started to switch from cash to electronic (and contactless) payment methods, even when making purchases at brick-and-mortar retail locations.
“While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce,” said Mastercard Chief Economist Bricklin Dwyer. “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.”
The new report builds on a prior Recovery Insights report that found that e-commerce spending went up $53 billion in the first few months of the pandemic. The Mastercard subsidiary NuData has argued that online businesses will need to adopt stronger and more user-friendly security technologies to retain customers once people start to return to in-person activities.