Fact of the Week: In the First Year of the Pandemic, E-Commerce Leapt from 10.5 Percent of Retail Sales to 14.6 Percent

Source: Annual Retail Trade Survey, “Estimated Annual U.S. Retail Trade Sales - Total and E-commerce1: 1998-2019 (ecommerce.xlsx),” U.S. Census Bureau, January 2022.

Commentary: In 1998, just 0.2 percent of retail purchases were made via e-commerce, whether through non-store retailers or other online orders. The emergence of e-commerce reduces information costs by allowing consumers opportunities to easily view and compare products in order to make informed decisions, while also adding convenient delivery. While e-commerce certainly innovates long-held retail practices of previous decades, in-store retailers still maintain the prevalence, convenience, and discount that has their afforded greater market share. But that share is thinning, as demonstrated by recent findings from the U.S. Census Bureau’s annual survey of retail trade sales known as ARTS.

The 2022 ARTS release shows that e-commerce sales accounted for 14.6 percent of total U.S. retail sales in 2020. Prior to 2020, there were consistent, gradual increases in the share of retail purchases made online—an uptick of 0.49 percentage points each year from 1998 to 2019. But then, in the first year of the COVID-19 pandemic, when brick-and-mortar retailers across the country shut down or pivoted to online sales to minimize contact, that share grew by 4.1 percentage points in one year—from 10.5 percent to 14.6 percent. While this unprecedented growth rate was likely a temporary shock to be reflected in future ARTS data, e-commerce nonetheless is becoming increasingly integral to the retail economy. To be sure, e-commerce platforms add greater competition to the brick-and-mortar ecosystem. But they do not pose an existential threat. Both sides of the retail market are consistently growing and more likely support consumers in complementary ways rather than in zero-sum competition.