Emergence of Covid-19 to Augment Growth of Online Retail Market

 

Increasing adoption of smartphones is expected to propel growth of the global online retail market. For instance, according to Pew Research Center, as of February 2019, 81% of U.S. adults used smartphones compared to 77% in October 2018. Moreover, increasing penetration of internet is also expected to aid in growth of the market. For instance, according to China government-backed Market Intelligence & Consulting Institute and reported by China Internet Watch, internet penetration in China reached 61.2 percent in the first half of 2019, with 854 million internet users at the end of June 2019.   

Emergence of Covid-19 is expected to offer lucrative growth opportunities for players in the global online retail market. For instance, in July 2020, Columbia Sportswear Company reported a 40% decline in overall net revenues in its July 2020 quarterly earnings report, due in part to pandemic-related store closures. However, the company’s e-commerce sales increased 72% compared with the year-ago period. Moreover, increasing expenditure on personal care products is also expected to aid in growth of the market. For instance, according to the U.S. Bureau of Labor Statistics, average annual expenditure on personal care products in the U.S. increased from US$ 707 in 2016 to US$ 768 in 2018.

Among regions, Asia Pacific is expected to witness significant growth in the online retail market. For instance, according to India Brand Equity Foundation, the e-commerce sector in India is expected to reach US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. The market is also driven by significant growth in the FMCG sector. For instance, according to India Brand Equity Foundation, FMCG market in India is expected to grow at a CAGR of 27.86 per cent and is expected to reach US$ 103.70 billion by 2020 from US$ 52.75 billion in FY18.

Africa is expected to witness low growth, owing to lower level of internet use in the region. For instance, according to Pew Research Center (October 2019), Sub-Saharan Africa has a lower level of internet use than any other geographic region, ranging from a high of 59% in South Africa to a low of 25% in Tanzania.

Competitive Analysis

Major players operating in the global online retail market include, Amazon Inc., Alibaba Group, eBay Inc., Otto GmbH & Co KG, JD.com Inc., Groupon Inc., Shopify Inc., Flipkart, Rakuten Inc., and Zalando S.E.

November 2019: Amazon announced plans to build a new state-of-the-art Amazon Robotics innovation hub and invest over US$ 40 million in the new site.