That’s life, that’s what all the people say…as the great Frank Sinatra said. Except we were riding high in March and have been shut in for 5 months and counting, or was it 6. At this point I’ve lost count, and I’m sure you have too. Endless weeks of shuffling up and down stairs from the bedroom to the office with the occasional trip to the grocery store. Now I see light at the end of the tunnel as we embark on the long process of returning to normal. The only question is, what normal?

I’ve been pondering this question for the last few months as the pandemic threw a big wrench into what we thought was a well-oiled machine (that machine being day to day life). We were then quite literally finding ourselves lying flat our face. Now it’s time to pick ourselves up and get back in the race. What I’m realizing is that Covid19 has forced us to move forward and innovate at a faster speed than we ever have before. I’m going to explore some of those themes here today and in future posts.

Even with millions of jobs lost and many families on temporary assistance in the form of the CERB and EI, we still found a way to flex the credit cards. Visa, Paypal and other payment processors are loving every minute of it. Online shopping volumes exploded in the spring and a torrent of Amazon boxes showed up at our doors. Who doesn’t want next day delivery, or even same day delivery? That concept just boggles the mind. As Arthur C Clarke said, any sufficiently advanced technology is indistinguishable from magic.

According to Adobe Analytics, nearly half a trillion dollars have been spent buying goods online in 2020, an increase of more than 55% year over year. Ecommerce now represents nearly 15% of global retail sales, eclipsing more than 3.5 trillion dollars in 2019, and this share will only keep going up. This rapid shift from brick and mortar to online has propelled names like Shopify, Amazon.com, Etsy and Alibaba into the stratosphere like one of Elon Musk’s Falcon rockets. While this secular shift is inevitable, the sudden shock from Covid19 proved too much to handle for many retail companies.

Many small businesses have been forced to close and even big retail names like JC Penney, Neiman Marcus and Pier 1 Imports have filed for bankruptcy. Now I must add the caveat that these names were already teetering on insolvency, but failing to prepare for the inevitable is a result of poor management. While businesses are pushing for more online presence, sudden shocks expose weaknesses. When the tide goes out, you see who’s not wearing any swimming trunks.  

Unlike the aforementioned retail dinosaurs, many firms have had the foresight and are expanding their internet footprint. Grocers like Metro have seen increased volumes in online ordering and pickup. The alternative of waiting in line outside in the rain for your food is rather miserable and evocative of Soviet-style bread lines. Wholesalers like Costco have seen their quarterly sales jump nearly double digits with customers rather bizarrely loading up on toilet paper…among other things. I think too many people watched re-runs of Doomsday Preppers and Contagion on Netflix thinking the world was going to end. Though, if I could sum up 2020 in one word, it would be overreaction.

Some interesting spending trends of note revolve around home improvement. As we’re basically stuck here unable to fly without quarantining, consumers are upping their game by pimping out their backyards and renovating the house. Items like patio sets, outside heaters and even pizza ovens are flying off the digital shelves and manufacturers can barely keep up. I can speak from experience as I’ve been waiting weeks for my patio set to show up in…you guessed it, a big brown box.

The increase in spending has led to higher volumes for the transport and logistics companies. CN Railway, Cargojet and Union Pacific and UPS have been all smiles moving the mountains of brown boxes across the continent. Logistics centers for warehousing are expanding as well, with Granite REIT and Prologis able to capture the ecommerce trend. We see an increasing need for warehouse space for companies like Amazon and their fulfillment centers to ensure same day delivery.

Hey Alexa, find me a Japanese chef knife, a tweed jacket and check the delivery status on my Allen Edmonds. In comes Arthur C Clarke again. For those who can’t bring themselves to type and drag a cursor across the screen, the machines are ordering for you as well. I’m starting to feel like Will Smith in iRobot. Artificial intelligence is helping consumers by tracking buying patterns and suggesting ideas for new purchases. It’s creepy how accurate it can be but that’s what I call service. Knowing how people shop is crucial as it allows firms to predict which items could be greater demand in the future. This allows companies like Amazon to stock their warehouses with the items in question to allow for that all important same day delivery. Radical man!

This ability for retailers to tailor your online shopping experience and personalize ideas for you helps reduce the aptly named bounce rate. The bounce rate is the percentage of visitors who leave the website after viewing a page. Knowing how to give customers what they want as efficiently as possible leads to increased revenue for that business.

One last trend I would like to cover is sustainability. With local small businesses in Canada hurting from the shutdown, I see a move by many to advocate for buying local. With Canadian consumers becoming wealthier, they are able to consider things like where their goods come from and how they are made. I am totally on board with this. Helping local small businesses is a great way to grow and strengthen your community. Online retailers have taken notice as well. Companies like Etsy specialize in selling locally made crafts. Even more retailers are putting product details such as composition and country of origin. Those brown boxes we see are being made with more recycled materials, receipts are now paperless, and items are using less plastic for wrapping. All positive developments to cater the ever-increasing demands of the discerning consumer.

All this to say, eCommerce is growing at light speed. So let’s get on the train and ride it into the sunset. Remember, if you stay on the platform, you'll just be another JC Penney. Stay tuned for our next issue where we’ll look at some other disruptor technologies and changing trends.