Commerce & Technology

Will online shopping keep rising or will people rush back to retail stores in 2021?

With large ecom giants snapping up high-street brands and the exponential growth of online shopping globally, the future – or 2021 at least – is looking positive for ecommerce.

Online spending explodes in China, but will mega-malls lure consumers back to retail stores? Amazon Pantry closes down in favour of something more flexible and curated for online grocery shopping, and we look at how one online food delivery company is preparing for its first multi-billion dollar IPO. Finally, how has Brexit impacted the ecommerce industry now that the UK is officially no longer part of the EU?

Key takeaways:

  • Consumers in China will spend $1.1tn online this year, up from $826.6bn in 2019.
  • Deliveroo secures $180m in investment as it prepares for IPO. London company valued at more than $7bn after Covid accelerates food delivery orders.
  • Amazon Pantry is being discontinued as Amazon consolidates its grocery delivery services.
  • Retailers are facing ‘perfect storm’ complications, including delivery suspensions and unexpected Brexit duties, but are there new opportunities to be had?
  • Ecommerce giant Boohoo Group has bought the Debenhams brand and website for £55m. 

China has the largest online ecom population, with 710 million people shopping digitally

With a population of 1.4 billion and 710 million people shopping online, China is accountable for 83.6% of the retail ecommerce market in 2020 and is set to spend $1.1tn online this year, up from $826.6bn in 2019, driven by Amazon competitors: Alibaba Group, JD.com, and Pinduoduo.

In 2020, Chinese online shoppers increased the frequency and amount of their online shopping and despite the pandemic, the Chinese luxury market saw an increase of 48% to $52bn, and is set to become the largest luxury apparel market worldwide by 2025. As restrictions ease, will we see that growth slow as consumers return to shopping offline?

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Deliveroo has secured another £132m of funding from shareholders 

Now valued at over $7bn, the London-based company is set to use the recent investment on “new tech tools to support restaurants and extend choice for customers,” said Will Shu, Deliveroo’s founder and chief executive, as it prepares for an IPO later this year. 

After the first lockdown forced restaurants to close, online delivery orders exploded and accelerated consumer adoption of food delivery services by about two to three years, with order volumes in the UK and Ireland doubling overall compared to 2019. 

Deliveroo competitor Just Eat said UK delivery orders had jumped 400% in the final three months of 2020 as further lockdown restrictions kept people at home. Will consumers keep ordering food online in 2021 or will they return to dining out?

Amazon Pantry is being discontinued as Amazon consolidates its grocery delivery services

Originally known as Prime Pantry and launched in 2014, Amazon has announced it will be discontinuing Amazon Pantry, and will instead sell household goods and pantry items alongside other Amazon products on the main ecommerce website.

The original idea for Amazon Pantry was to make it easier to stock up on everyday products that would otherwise be bulky or expensive to ship. Amazon Pantry charged customers a flat $5.99 shipping fee per box of groceries, which could be filled with up to 20 kilos of products.

Despite the removal of Amazon Pantry, the ecommerce giant’s grocery delivery ambitions are stronger than ever, with Amazon now owning Whole Foods and new Amazon Fresh branded stores being rolled out.

Boohoo Group has bought the Debenhams brand and ecommerce website for £55m

The deal, which only cements retail’s shift from bricks to clicks, was financed through the ecommerce giant Boohoo Group’s existing cash balance, and includes the department stores’ own brands but excludes its 124 stores and stock, which will be sold through clearance sales. 

The Debenhams website will relaunch on the Boohoo Group’s ecommerce platform in early spring 2021 and Debenhams stores will continue to operate to clear stock, once retail is allowed to reopen.

Boohoo Group said it intends to relaunch the Debenhams website to create one of the UK’s largest online marketplaces across fashion, beauty, sport, and homeware.

Brexit causes issues for retailers but may bring access to new markets and opportunities

Slightly overshadowed by national lockdowns, Brexit officially started on January 1st, meaning all exports from the UK to the EU are now subject to customer border checks, increased documentation, and import VAT meaning increased costs for ecommerce retailers.

The global pandemic has only added to the perfect storm with delays of stock delivery thanks to disrupted shipping schedules and a displacement of containers around the world.

A growing number of ecom retailers, including John Lewis, have now suspended customer deliveries into the EU as couriers such as DPD suspend services and brands work to establish new complex processes to counterbalance huge delays and backlogs in the shipping and imports. However, will we see new markets open up in 2021 to compensate for these issues? 

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