The COVID-19 pandemic has propelled e-commerce to the forefront of the retail industry. Even before the pandemic in 2019, global e-commerce sales have already jumped to $26.7 trillion, as shown in a study conducted by the UN Conference on Trade and Development. This is 4% higher than in 2018. In 2020, during the onset of the pandemic, a dramatic increase in e-commerce occurred amidst lockdowns and border closures, prompting the online retail sales’ share to increase to 19%, up from 16% of total retail sales, and prompting a robust B2C and B2B e-commerce sales and transactions, which accounted for 30% of global gross domestic product that year. These data clearly shows that indeed, the COVID-19 pandemic reduced the dependency of people on physical shopping, triggering a surge in e-commerce and accelerating digital transformation.
However, it is undeniable that the pandemic is only a catalyst for the rapid expansion of e-commerce, not a primary cause. In fact, e-commerce has already had a steady growth of 4.5% annually since 1990. This clearly demonstrates that the industry can expand even without the COVID-19 crisis. So, for the question, “will the e-commerce boom continue after the pandemic era?” we answer in the affirmative. Here’s why:
Rise of Digital Payment Platforms
In a study conducted by the World Bank, it was found that online sales have become a necessity, rather than an option amidst the COVID-19 crisis. This dramatic shift toward e-commerce gave rise to new digital payment platforms, such as digital wallet, to expedite both B2C and B2B e-commerce transactions. Commonly referred to as “embedded finance,” non-financial companies, including e-commerce wholesale platforms, now allow online payment and credit at the point of sale. This paved the way for small and medium-sized enterprises to improve their access to finances, increasing efficiency in the digital economy. As the World Bank sees “a strong increase in terms of penetration of digital payments and volume of transactions” in some countries, these developments are likely to continue even beyond the COVID-19 crisis.
Domination of Social Media Marketing
As transactions become more digitized day by day, businesses have resorted to social media as a marketing tool. With billions of users browsing everyday, they flock to Facebook, Instagram and YouTube to increase their visibility. While some people may dislike being flooded with ads on social media, it has already been proven that social media marketing is an effective way for businesses to engage with their target market.
In a study published by Springer Link, it was shown that social media has become the primary domain where both businesses and consumers receive information about the world. As such, social media platforms are continuously developing their social interactivity in domains such as travel, food, and music, and augmenting their platforms to provide a wider range of services. For example, Facebook integrated a marketplace where consumers and businesses may transact, while YouTube developed a paid-ads system that would play advertisements before or in the middle of videos. This prompted 71% of consumers to make a purchase based on social media referrals. With these developments in place, e-commerce is likely to continue dominating economic advancements even post pandemic.