Back to the trend line?

Back in 2020, as we were all locked down and forced to do everything online, we got very excited about ecommerce penetration. All sorts of charts went viral showing that we’d jumped forward anything from three to five years in a couple of months. This was a big part of the ‘Covid Rotation’, and now we’re on the other side of that rotation - people went back to the office, and back to stores, and back on planes. And for retail and ecommerce, it looks like a lot of that growth was temporary, and we’re reverting to the trend line.

There’s a pretty obvious question in this chart, though - percentage of what? This is what the absolute numbers for US e-commerce look like. That reversion to the trend line suddenly doesn’t look quite so obvious.

The issue, of course, is that total retail sales have been far from stable, and so as the denominator has swung around, so has the e-commerce penetration. US ecommerce has, in fact remained at the new higher level - for now - but there has been a surge in physical (and, of course, inflation has suddenly shot up to 10% or so).

You can see this more dramatically in the UK, which had a much bigger lockdown and hence much bigger swings in the denominator and in the penetration. The penetration percentage has spiked all over the place.

Equally interesting, I think, is the question of which ‘retail’ number we should use as the (Read more...)