Ecommerce Flourishes as Shoppers Swap In-Store for Online

The events of 2020 have hastened the digital transition of many bricks-and-mortar businesses. It’s not only store owners who’ve had to contend with the hard reality of shuttered shopfronts; it is the many businesses that supply such outlets, and whose phones have suddenly stopped ringing. 

As for the firms who spent months and years dithering over contactless payments, a website upgrade or the prospect of selling direct-to-consumer, they were made to regret their circumspection. Not that many could have spotted a pandemic approaching.

Making Payment a Priority

There is no sense now in looking back, only forward. And when it comes to securing their bottom line, businesses have done a good job of identifying their priority: payments. Payment gateway companies are enjoying a major boom, with PayPal’s onboarding of 1.7 million merchants during Q2 causing its shares to climb by over 80% this year. Shares of Shopify Inc. and Square Inc. are doing even better, soaring past the 100% mark in both cases. 

SMEs have been especially keen to implement and refine ordering and delivery processes, and to reduce friction by permitting customers to make purchases using their chosen method. After all, few startups can choose to be picky in the current moment.

It’s not all about the crisis, either. Internet penetration continues to increase, with an estimated 4.1 billion users in 2019 – up 5.3% versus 2018. Growing internet adoption is a major driver of the payment market, which is forecasted to rise from $17.2 billion last year to $42.9 billion by 2025. 

As for mobile wallets, their popularity was surging even before the pandemic, with platforms like Apple Pay, Google Pay, Alipay and WeChat Pay ushering in the era of real-time digital transactions. In 2018, global mobile payment transactions accounted for a staggering $4.3 trillion, a year-on-year spurt of 38.4%. Norway’s utilization rate is the highest in Europe at 42%, and given current fears about handling cash, we can expect that percentage to go one way.

Stores Fall Silent as Online Market Rockets

Due to stay-at-home orders and general fears concerning virus transmission, retail platforms experienced a 6% global traffic increase between January and March of this year. Needless to say, well-positioned brands like Amazon capitalized to a ridiculous extent, with Amazon posting $75 billion in first-quarter revenues – a 26% increase on last year. As for Visa Inc., online spending is up by an almost identical percentage (25), twice the growth it was generating pre-pandemic.

While a semblance of normality has returned in many countries and states with the reopening of physical businesses, the mandatory mask guidance – coupled with general wariness about mingling with others – is continuing to drive the online boom.

The prospect of a “new” normal, with its Orwellian wordplay, might send a shiver down the spine. But the fact is, businesses that don’t embrace a digital-first model and get their payment infrastructure in place are risking obsolescence. The take-home? Make your operation pandemic-proof – before it’s too late.