Nearly $1 in $5 spent on retail purchases during the quarter came from online orders, Digital Commerce 360 estimates. While digital growth was high, stimulus checks also fueled an in-store spending spree.

Armed with more stimulus money in their pockets, consumers closed out the first quarter of 2021 spending significantly more online with U.S. retailers than the same period last year, according to U.S. Department of Commerce figures released Tuesday. Despite rising vaccination rates, declining average daily coronavirus cases and more cities and states reopening, Americans still shopped on the web in big numbers.

Ecommerce reached $196.66 billion in Q1, up 39.0% year over year from $141.52 billion in the same quarter of 2020. Nearly $1 in every $5 spent on retail purchases came from digital orders, suggesting the pandemic-related boost to online shopping hasn’t tapered off yet.

Ecommerce growth in the first three months of 2021 was nearly triple the 13.8% increase registered in Q1 2020, which captured just two-and-a-half weeks of retail spending after former President Donald Trump declared a state of national emergency on March 13. By Q2 2020, widespread store closures and consumer anxiety over being in public spaces during a global pandemic caused a huge surge in ecommerce demand, and online sales soared a record-breaking 43.7% year over year. The 39.0% growth in Q1 2021 is the second-highest pandemic period increase behind that Q2 2020 peak.

It’s also the second-highest recorded rate for any Q1, behind just 2001, when online sales surged 42.7% as the far less mature ecommerce market was picking up steam.


Online penetration nears 20%

Digital’s share of total retail sales rises incrementally each year as shoppers get increasingly comfortable purchasing online and retailers fine-tune ecommerce operations to deliver goods more quickly and efficiently. COVID-19 magnified those trend lines in a big way.

Online penetration hit 19.5% in the first quarter of 2021, Digital Commerce 360 estimates. That’s up substantially from 15.9% in Q1 2020 and 14.8% for the same period in 2019. Last quarter’s digital share is slightly lower than 2020’s Q2 and Q4, which both crossed 20%. But that’s partly because total retail sales across all channels grew a lot more at the beginning of 2021 than it did throughout 2020, so gaining share was more difficult.


Before the pandemic, no quarter or year achieved even a 2 percentage-point gain in ecommerce penetration over the prior-year period. But that all changed during Q2 2020 when online’s share of total retail skyrocketed 5.8 percentage points over the prior year’s second quarter. Jumps have tapered off a bit since that apex, but Q3 2020, Q4 2020 and Q1 2021 all increased penetration by 3.6 percentage points year over year.

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.

US total retail sales in Q1 grow at highest-ever rate for any quarter

Sales through all channels reached $1.01 trillion last quarter, up from $891.71 billion in Q1 2020. That 13.1% increase is the highest year-over-year lift for any quarter or year dating back to at least 1993, the first year for which growth is available through Commerce Department data.

Q1 2021’s record jump in retail spending was more than double the 6.1% growth in the first quarter last year and notably higher than even pandemic-fueled quarters late in 2020, when total retail recovered after a dramatic drop in the spring.


It’s interesting that no channel dramatically outperformed the other in Q1. Last quarter, ecommerce drove 47.1% of all retail growth for the three-month period ending March 31. That means offline sales—the vast majority of which occur in stores—grew 8.2% year over year versus 4.8% in Q1 2020. The quarter’s offline sales jump is the highest-ever rate for which data is available. For comparison, in the five years leading up to 2020, the median year-over-year quarterly growth for offline sales was just 2.2%.

The digital impact on Q1 2021 overall performance is right in line with the pre-pandemic five-year median but lower than online’s share of total retail growth for Q2-Q4 2020. In Q2 2020, for instance, ecommerce accounted for all retail gains and completely offset a 4.4% decline in offline sales as non-essential stores were closed. While ecommerce in Q1 2021 maintained COVID-19-level growth, buying behaviors already began changing.

Amazon’s disproportionate impact Inc., No. 1 in the 2021 Digital Commerce 360 Top 1000, is always the biggest piece of the U.S. ecommerce story, and last quarter was no different. The web giant reported rapidly growing sales so far in 2021, and according to Digital Commerce 360 estimates, the company’s U.S. revenue hit $60.44 billion in Q1, up 42.3% from $42.48 billion last year. That’s nearly double Amazon’s 23.9% U.S. revenue growth for the same quarter in 2020. Figures include Amazon’s sales from its own products, or first-party inventory, plus the commissions and fees the company receives from its marketplace sellers, Amazon Prime memberships and other subscription services.

That means Amazon-owned sales alone accounted for 30.7% of all U.S. ecommerce in Q1 and were responsible for nearly a third of growth in the online sector from January through March.


Post-pandemic expectations

With much of last year marked by severe dining, entertainment and travel restrictions, consumers shifted much of that discretionary spending to physical goods. That included items that kept them comfortable, entertained or active while stuck at home like exercise equipment, home office furniture, loungewear, patio and garden upgrades, and pools and toys for bored kids.

Now that governing bodies are easing mask mandates for vaccinated individuals, and consumers are receiving increasingly positive news about getting back to normal, the pendulum may partially shift back to pre-pandemic spending habits in the coming months. Given the pent-up demand for in-store shopping, restaurant reservations, concerts and vacations, Q2 retail data may show a different retail landscape.


Percentage changes may not align exactly with dollar figures due to rounding.