Online grocery, BNPL keep growing after pandemic ecommerce boom
Adobe Analytics looked at how ecommerce shopping habits shifted in 2022.
Photo by KOBU Agency on Unsplash
Adobe Analytics looked at how ecommerce shopping habits shifted in 2022.
Ecommerce is showing staying power with consumers following the pandemic, leaving room for the growth of more product categories and digitally-enabled ways to shop.
That’s the takeaway from new data released by Adobe Analytics this week that offers the latest evidence to help understand shifts in digital shopping behavior that accompanied the lifting of pandemic restrictions in 2022.
While there is evidence that more people returned to stores in 2022, Adobe found continued growth in several areas of ecommerce that spiked during the pandemic, including grocery and Buy Now Pay Later. At the same time, a slowdown in curbside pickup and uptick in mobile shopping offer a reminder that behavior will continue to evolve.
Here's a look at the data:
There are signs that consumers are turning online to buy more types of products. Categories like home furnishings and grocery previously struggled to take off in ecommerce, but both saw notable growth in 2022.
Home furnishings grew 10.2% year-over-year, reaching $126 billion in spend. This continued in February 2023, with 12.9% sales growth to $9.4 billion.
Grocery, which saw a surge during the pandemic, saw continued growth of 10.8% in 2022, reaching $86.8 billion. In February 2023, there was even more pronounced growth of 26.7% YoY, driving $8.4 billion in spending.
Not every category saw such a dramatic uptick. Electronics, which consistently has the largest share of ecommerce spend, grew 4% year-over-year in 2022. Meanwhile, apparel fell 3.8% year-over-year.
“Ecommerce demand has remained resilient in an uncertain economic environment, driven in part by lasting pandemic habits where consumers had no choice but to leverage online food and home furnishing shopping services,” said Vivek Pandya, lead analyst at Adobe Digital Insights, in a statement. “Now consumers have embraced the rich ecommerce experiences that made them feel comfortable getting these necessities delivered to their doorsteps, making these categories new growth drivers in the digital economy.”
The pandemic ecommerce boom also led consumers to embrace new types of digital shopping experiences, from how they paid to how they received items.
In this area, there are also signs of continued expansion. Buy Now Pay Later, which allows shoppers to pay in installments, had a fast rise in 2020 and 2021 amid the ecommerce boom. Expansion continued as a higher cost of living due to inflation left consumers seeking to spread out payments. In 2022, the share of online purchases made with BNPL continued to grow at a rate of 14% year-over-year, while revenue grew 27%.
Adding to evidence of staying power, BNPL is proving to be popular in the categories showing the most growth. In the first two months of 2023, groceries’ share of BNPL grew 40%, while home furnishings grew by 38%.
“The rise of Buy Now Pay Later usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways,” Pandya said. “The strong online growth of home furnishing purchasing is expected to bolster Buy Now Pay Later adoption, given the higher ticket prices in this category.”
Price is also playing a role. According to Adobe’s Digital Price Index data from January 2019 through February 2023, share increased in the cheapest pricing tier for categories such as groceries (35.6%) and electronics (57.1%).
The pandemic also introduced more shoppers to fulfillment methods that blended ecommerce and stores. One of these was curbside pickup, which was a must-have option for retailers amid the health emergency that required distancing. But this practice has seen a slowdown. In 2021, 23% of online orders from retailers who offered curbside pickup used this option. In 2022, it fell to 19%, followed by a further fall to 17% in the first two months of 2023. However, there are still more signs of interest in grocery, which was a prime use of curbside pickup. That category grew 8% year-over-year in early 2023. By contrast, electronics grew only 2%.
Many retailers now have curbside pickup, and that's unlikely to go away. Rather, it is now best considered one of a number of options that retailers are offering consumers who want to have choices, alongside in-store pickup and local delivery.
The return to stores didn't replace ecommerce. Rather, the two channels are now blended more than ever before. As shoppers move across physical and digital retail, they are embracing mobile devices that help to connect the two. Adobe noted that the 2022 holiday season marked a “turning point” for mobile shopping, as a majority (51%) of Cyber Week sales were made using smartphones for the first time. This trend is expected to continue. By December 2023, Adobe expects smartphones to drive the majority of sales every month.
Yet there’s a gap between the largest retailers and smaller retailers in growth. Retailers with over $1 billion in annual sales are driving 38% more visits that result in purchases than retailers making $10-50 million in annual sales. For smaller retailers, share of revenue is also 8.6% lower.
It underscores how there are still plenty of opportunities to expand and improve digital commerce. The pandemic proved to be a great leap forward for retailers introducing ecommerce capabilities, but it is not the end of the expansion.
Dealboard has funding and M&A updates from ecommerce aggregators and forecasting software.
This week, the aggregator space is active with M&A, IKEA is ready to roll out newly-purchased warehouse management software and Authentic Brands Group acquired a boot icon. Plus, there’s new investment to report for YouTube influencer Emma Chamberlain’s coffee brand and retail forecasting.
Here’s a look at the latest deals:
Chamberlain Coffee, the consumer brand founded by YouTube influencer Emma Chamberlain, raised $7 million in new funding.
The financing included backing from existing investors including Blazar Capital, Chamberlain and United Talent Agency. New investors include Volition Capital, Electric Feel Ventures, L.A. Libations and Noah Bremen, founder of PLTFRM.
The new funding follows the launch of a Ready-to-Drink (RTD) product and coffee pods. Previously, the brand raised a Series A in August 2022.
"Creating a uniquely inviting coffee brand has been my dream for so long now, and having key investors back us allows us to build Chamberlain Coffee in ways that feel fresh and exciting,” said Chamberlain, in a statement. “There are so many products I am eager to develop and projects I'm excited to get working on. With such an incredible team and group of investors I am more excited than ever to see what the future holds for Chamberlain Coffee."
Impact Analytics, a software company for retail supply chain and merchandise planning, raised new funding from Vistara Growth.
The new investment, the amount of which was not disclosed, comes after Impact raised funding in February 2021 and October 2022 from Argentum.
The funding will help Impact Analytics further develop its Impact Analytics SmartSuite product portfolio, which is designed to help optimize forecasting, merchandising and end-to-end lifecycle pricing. Rather than the traditional forecasting approach of basing decisions on the preceding year, Impact Analytics applies a model that includes 150 variables from internal and external sources, while combining recency and history. Clients include BJ's Wholesale Club, Dick's Sporting Goods, Puma and Tapestry.
Selva Ventures, a venture capital firm focused on consumer brands that promote healthier living, closed its second fund at $34 million, TechCrunch reported.
With the new funding, Selva will invest in brands across categories including health, wellness, beauty and personal care. The fund expects to write checks of $1-2 million in seed and Series A startups, while assisting in areas like finance, operations and retail partnerships.
Backers of the second fund include Unilever Ventures, PagsGroup and Obelysk.
Nautica and Forever 21 owner Authentic Brands Group acquired the intellectual property of Hunter, a 160-year-old British outdoor lifestyle brand known for its Wellington boots.
With the deal, ABG appointed longtime partners Batra Group and Marc Fisher to execute retail and ecommerce operations, as well as continue to expand the brand in the UK and U.S., respectively.
“At the intersection of fashion and outdoor, Hunter introduces another elevated global brand to Authentic’s diverse Lifestyle portfolio,” said Authentic CEO Jamie Salter, in a statement.
Terms of the deal were not disclosed.
The investment arm of IKEA parent Ingka Group acquired the warehouse management software platform Made4Net.
As a result of the deal, Made4Net’s software will be deployed across IKEA’s 482 stores and fulfillment centers. Made4Net will continue to operate as an independent subsidiary of Ingka, with a headquarters in New Jersey. CEO Duff Davidson will remain at the helm of the company.
“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, head of retail at Ingka Group, in a statement. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”
European ecommerce aggregator SellerX acquired Elevate Brands, a U.S.-based aggregator.
The combined companies will be known as SellerX Group. It will comprise a portfolio that includes 80 Amazon-native private label consumer brands in categories including sports and outdoors, home, mobile accessories, pets and consumables. The portfolio will span over 40,000 products.
With the deal, SellerX Co-CEOs Philipp Triebel and Malte Horeyseck will lead SellerX Group, while Elevate Brands cofounders Ryan Gnesin, Jeremy Bell and Robert Bell will remain in key leadership positions.
“This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure,” said Triebel, in a statement. “By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”
Ecommerce aggregator Society Brands acquired Wolf Tactical, a tactical gear company.
Founded in 2017 by Tim Wu, Wolf Tactical makes products including DC belts, range belts to weighted vest and tactical backpacks.
"I started Wolf Tactical by myself as a side hustle with very limited knowledge of business and entrepreneurship. A combination of hard work and relentless learning allowed me to build it into a multi-million-dollar business," said Wu who will remain as brand president, in a statement. "With the help of Society Brands, I have access to untapped potential that I would not be able to achieve by myself.”