UK online sales will settle at £12.8bn, as e-commerce’s 25% market share becomes the ‘new normal’
As shoppers return to the High Street, online sales have fallen for four months in a row, with Amazon and Etsy reporting a marked slowdown in growth. But the e-commerce expert ParcelHero predicts online will level out at a quarter of all retail sales.
Shoppers may be flooding back to High Streets and shopping centres, but online sales are still booming. Shopping habits post-Covid will result in e-commerce levelling out at around 25% of all retail sales. That means that UK internet sales will be worth around £12.8bn annually.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Our figure of 25% is a significant fall from the 36.1% of all retail sales that online grabbed last February at the height of lockdown. However, it’s still a huge increase on the 19% share online used to take, before the pandemic permanently shook up retail.
‘For some months now, retailers have been trying to guess what the new normal will look like. We believe the picture has now become a lot clearer. The cash registers have certainly been ringing more frequently in stores ever since non-essential shops returned to life on 12 April, but ParcelHero’s own research shows that 46% of consumers have no intention of returning to their pre-Covid, High Street spending levels. Indeed, July saw a decrease in retail footfall compared to June.
‘Online sales fell 4.7% in June compared to May, and they have been falling every month since March, but not at such a rate as to indicate shoppers have abandoned their new online spending habits. As a result, everyone has been trying to assess the new “natural order” and it’s looking like online will permanently secure around a quarter of all retail spending.
‘We’ve looked at data from the smallest online marketplace traders to the largest retail behemoths such as Amazon. There’s no doubt the growth in online spending has slowed dramatically, but any retailer trusting that things will return to how they were pre-pandemic will be sadly mistaken.
‘At the peak of the pandemic, Amazon was experiencing growth of 41%. In contrast, its gross revenues are expected to grow at “just” 10% to 16% next quarter. That’s a big slowdown but, significantly, the continued projected growth indicates that post-Covid shoppers will keep the online habit.
‘Similarly, Etsy, the online marketplace for handmade and crafts items, is still growing in the second quarter of 2021, despite the return of High Street shopping. Etsy, which now owns Depop and Reverb, saw group revenues rise 23.4% to $528.9 million in the three months to 30 June. For the next quarter, it thinks revenues will come in between $500 million and $525 million. That’s a definite decline but far from a collapse to pre-Covid levels.
‘ParcelHero anticipates there will be something of spending spree on our High Streets during August, as everyone enjoys the Great British Staycation. However, the return of colder weather this autumn will likely see new concerns about Covid-19, flu and other illnesses. Everything points towards long-term equilibrium, with online spending maintaining a 25% hold on the UK’s overall £51.4bn retail spend.
‘Ultimately, the fight between online and in-store sales must end in a draw. An omnichannel sales strategy, embracing both shop and online sales, with both services complementing the other, is the only way forward as retail claws its way back from the clutches of the coronavirus. To find out how in-store and online must grow together to ensure success, see ParcelHero’s new study on the High Street of the future at: https://www.parcelhero.com/research/shop-of-the-future
