Online shopping economy holds steadfast among inflation fears
Photo by Karolina Grabowska
The online shopping economy has seen a boomtime over the past few years. The pandemic negatively impacted traditional avenues while eCommerce flourished. Today, online sales account for 26.5% of all sales in the UK, twice as much as 10 years ago. But is the party over? We can never really predict exactly how the economy will shape up or down. Yet past data and future trends are often good indicators. All we really pay attention to is when it gets better.
eCommerce is an embedded and vital part of business for a modern company. We have all changed the way we think about shopping online, with most opting to order goods over the web for sheer convenience despite some things costing more. It also shows in the services we see. The average UK and European fulfillment centre enjoys the benefits that come with a growing trend. According to the ONS, there are 88% more storage premises today than in 2011.
Of course, the holiday season plays a crucial role in garnering quarterly sales. Seasonal shopping offers businesses the opportunity to capitalise on consumerism, with Black Friday as an example. However, holiday spending actually drops off for the two weeks after Black Friday. However, retail has had a miserable time lately, with almost all job gains in healthcare and government dropping as retail employment fell. The good news is that inflation is steadily falling.
After a somewhat shaky holiday season, the new year brings some good news. The ONS reports that there have been increases in the services sector, such as hairdressing and hospitality, which have seen an average 0.2% retail increase. These are believed to have been the strongest contributors to helping the economy limp along after entering a quasi-recession in January 2024. These have reportedly also been helped by strong supermarket spending.
Online shopping is a way to entice consumers with goods and items these days. However, some prefer the traditional visit to the store, with many holding onto their cold, hard cash until Black Friday. Each year, Black Friday sales outdo themselves with a year-on-year increase of 7.5% (US( according to Adobe Analytics. Last year, American shoppers splurged a record $9.8 billion on the dreaded day, with online shopping beating this with $12.4 billion on Cyber Monday.
The convenience, speed and deals of eCommerce platforms are second to none. However, it is evident that some people are turning their backs on Amazon and other online services. eCommerce is popular. But some reasons cited for not using certain platforms include personal values, contributing to the local economy, and concerns over the environment. The latter is critical since Amazon alone contributes around 72 million metric tonnes of CO2 each year.
The UK and USA are among the world’s most ravenous online shoppers. Yet the online shopping economy spreads further afield than these two nations. Some experts agree that before the end of the year, the Asian market will account for over 50% of online orders. It is suggested that this will be led mainly by China, pushed by special commerce days such as Black Friday, Cyber Monday, and Singles’ Day by Amazon, Alibaba, and even Walmart.
You may believe that online sales are an indicator of economic satisfaction. Paradoxically, it can have a major negative impact. While services like Amazon perform well, other retailers lose out. Brick-and-mortar stores contend with increased overheads, the likes of which eCommerce retailers are free from. Increased online sales can fuel a poor economy. The competitive nature of sales means physical retail stores cannot offer wage increases as inflation rises.
In the UK, at least, there is some rare good news. The High Street is being somewhat revitalised by the growing “Pop-Up Shop” economy. Some even say they are giving old and worn-out vacant stores a new lease on life. The number of pop-up shops in the UK has grown by 18%, according to Eclipse Group Solutions. As the high street declines, some think these are the solution to rundown town centres as large retail chains like Wilko close down stores.
But what is the real attraction of online shopping? Some say it’s convenient. This is especially true for people with limited mobility, those in rural areas, or those who don’t drive. Others state the costs are lower. This is true for specific products on sites like Amazon. Yet online grocery shopping via supermarkets leaves a lot to be desired. There has been one report of a shopper having their carrots swapped with “feminine hygiene products”. Was this an AI or a human?
Further to AI, we could soon see a bit of a war between the traditional and the contemporary. AI is used by major online platforms. You may have heard of AI over the past few years, but Amazon has actually been using it for over a decade. AI in online retail helps personalise the shopping experience based on collected data and metrics when you interact with the system. AI such as Rufus offers items you may like, clothing size guides and rich product descriptions.
Online retail giants like Amazon, Wish and Alibaba will do all they can to keep us coming back for more. On the one hand, they satiate a hungry public, always wanting more products at the best prices. On the other hand, there is a hidden impact on retail by eCommerce. The local economy has been hit hardest. Even major retailers such as John Lewis, Debenhams and Wilko in the UK have not been able to survive high inflation, recession and online competition.
To sum up, eCommerce and online shopping are alive and well and here to stay. Whether you agree with it or not, there are alternatives. Yes, some major High Street brands are gone. However, online retail is optional. Pop-up shops are filling the gaps left behind by retailers, and they are becoming a popular choice for those who disagree with services such as Amazon. People are choosing alternatives based on personal beliefs and environmental concerns.
