In a year where shoppers turned to the web in wildly elevated numbers as the pandemic raged, consumers closed out the last quarter of 2020 spending an astounding 32.1% more online with U.S. merchants than the same period in 2019, according to U.S. Department of Commerce figures released Friday. Ecommerce hit $245.28 billion in Q4, up from $185.70 billion during the same quarter the prior year, and more than $1 in every $5 spent on retail purchases came from online orders.
While Q4’s online growth was the second-highest ever rate for the quarter and still nearly double the 16.3% growth registered in 2019, it was a slowdown from earlier COVID-19-fuelled periods.
The Commerce Department’s Q1 data captured only two-and-a-half weeks’ worth of retail spending after former President Donald Trump declared a state of national emergency on March 13, 2020. Online sales in the first quarter increased just 14.6% year over year and didn’t yet show signs of shifting shopping behavior amid the coronavirus. But that all changed by Q2, when digital revenue skyrocketed 44.4%, marking the second-highest growth rate of any quarter or year for which data is available, as shoppers scrambled for essential items during widespread stay-at-home orders and store closures. The frenzy tapered off just a bit in the third quarter, when ecommerce grew 37.0%, as consumers settled into their new at-home routines, panic buying subsided a little and stores were largely reopened.
Digital’s share of total retail sales historically rises each year as shoppers get increasingly comfortable purchasing online and retailers fine-tune ecommerce operations to deliver goods more quickly and efficiently. But COVID-19 magnified trend lines in a big way in 2020.
Online penetration hit 21.6% in the fourth quarter, Digital Commerce 360 estimates. That’s up from 17.8% for the same period in 2019 and 16.0% in 2018. The nearly four percentage-point quarterly gain in ecommerce penetration is a major headline, as no other year or quarter achieved even a two percentage-point bump in digital share over the preceding year until 2020. Q4’s gain was beat only by Q2 2020, when penetration rose more than six percentage points to 20.8% from 14.7% in 2019. Digital’s share of total retail sales wouldn’t have reached those levels until 2021 had penetration advanced in the usual, more incremental way.
COVID-19-related shifts in buying behavior translated into an additional $33.31 billion in online sales in the fourth quarter, Digital Commerce 360 estimates. If digital revenue had accelerated at a more typical annual growth rate, ecommerce revenue wouldn’t have hit $245.28 billion until 2022. A normal, pandemic-free 2020 likely would have resulted in consumers spending only $211.97 billion on the web.
US retail sales grow nearly 9%
Sales through all channels reached $1.14 trillion last quarter, up from $1.04 trillion in 2019, according to a Digital Commerce 360 analysis of Commerce Department data. The sizable 8.9% lift—the highest-ever Q4 growth and the second-highest of any recorded quarter or year—was surprising in a year marked by store closures, lingering consumer anxiety over being in public spaces and the enormous boost to ecommerce. After all, total retail increased just 4.2% in Q4 2019.
Online sales drove nearly two-thirds—or 64.2%—of the growth in total retail in the quarter, up just a little from 61.4% a year earlier. Interestingly, though, the fact that ecommerce didn’t account for all gains means that offline sales grew a noteworthy 3.9% during Q4.
Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online, such as restaurants, bars, automobile dealers, gas stations and fuel dealers.
Amazon accounts for nearly half of all ecommerce growth
As always, Amazon.com Inc., No. 1 in the 2020 Digital Commerce 360 Top 1000, had an outsized impact on the U.S. ecommerce market last year. The web giant’s revenue reached $100.83 billion in Q4 2020, up a gigantic 47.5% from $68.34 billion the prior year. That’s nearly 2.5 times Amazon’s 19.5% online revenue jump during Q4 2019. Figures include Amazon’s sales from its own products (first-party inventory), plus the commissions and fees the company receives from its marketplace sellers, Amazon Prime memberships and other subscription services.
This means sales on Amazon alone represented more than a third—or 41.1%—of all ecommerce spending in Q4 2020. With consumers inundating the online retailer during the pandemic, Amazon increased its share of the market from 36.8% for the same quarter in 2019. What’s more, the web giant accounted for more than half—or 54.5%—of all U.S. ecommerce sales growth and more than a third—or 35.0%—of total retail gains in Q4.
2020 year-end highlights
Here’s where 2020 landed, according to a Digital Commerce 360 analysis of Commerce Department data…
Overall market:
- Ecommerce sales hit $791.70 billion in 2020, up 32.4% from $598.02 billion in the prior year. That’s the highest annual digital growth of any year for which data is available and also more than double the 15.1% year-over-year jump reported by the Commerce Department in 2019.
- Online penetration hit 19.6% last year, Digital Commerce 360 estimates. That’s up from 15.8% in 2019 and 14.3% in 2018. The nearly four percentage-point annual gain in ecommerce penetration during 2020 is by far the largest year-over-year uptick for U.S. retail ever recorded. Without the pandemic’s impact, digital penetration wouldn’t have reached that level until 2022.
- COVID-19 resulted in an additional $105.47 billion in ecommerce revenue in 2020, Digital Commerce 360 estimates. Online sales wouldn’t have hit $791.70 billion until 2022 had pre-pandemic trends continued.
- Total retail sales reached $4.04 trillion last year, up from $3.78 trillion in 2019, according to a Digital Commerce 360 analysis of Commerce Department data. The sizable 6.9% lift was the highest annual growth since 1999. Sales through all channels increased just 4.0% in 2019.
- Ecommerce accounted for nearly three-quarters—or 74.6%—of the gains in total retail in 2020, and that’s the highest share of overall annual growth the online sector has ever represented. It was also nearly 11 percentage points higher than the 2008 share, which came in second place, and substantially higher than online’s 54.0% share of spending gains in 2019. Offline sales grew 2.1%, which was the same rate as the pandemic-free prior year.
Amazon:
- Revenue reached $302.99 billion in 2020, up a remarkable 41.4% from $214.22 billion the prior year. That’s more than double Amazon’s 19.1% online revenue jump during 2019.
- Amazon represented more than a third—or 38.3%—of all ecommerce spending in 2020, up from a 35.8% market share in 2019. The online retailer accounted for nearly half—or 45.8%—of all U.S. ecommerce sales growth and more than a third—or 34.2%—of retail gains overall last year.
Percentage changes may not align exactly with dollar figures due to rounding.
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