The 2021 eCommerce Year In Review

Updated: Feb 4

Nowhere else was the old adage of living in “interesting times” more prevalent than in eCommerce. While we all faced uncertainty around the globe as we entered into the second year of the coronavirus pandemic, the availability of breakthrough vaccines in addition to loosened restrictions should have signaled the return of brick and mortar retail with a vengeance.

Yet the ongoing supply chain crisis affected both physical retail as well as eCommerce. Amazon may dominate the latter. But an unexpected turn of events soon proved that they could easily change the very face of retail as a whole when it was announced they exceeded the sales of Walmart in the US by some $40 Billion in August.

2022 may be just as unpredictable for eCommerce as 2021 was. But just how unpredictable was the market last year?

How Much Did the Pandemic Affect eCommerce in 2021?

It’s not just the US that saw a surge in eCommerce as a result of the pandemic. At $1.3 Trillion in sales, the market share of online retail in China surpasses that of brick and mortar by an estimated 52 percent. But just how well did eCommerce fare domestically compared to the 10 year growth reported during the first three months of 2020?

The reality is that eCommerce was already on the upswing prior to the pandemic. Amazon sales were $88.9 Billion in 2014—an enviable number by any standards. Within two years, that figure stood at close to $136 Billion. But by the end of 2020? That number stood at a staggering $386.1 Billion. For just one marketplace. And with third-party sellers being responsible for over 3.8 billion products sold on Amazon between August 2020 and August 2021, the continued scrutiny from federal regulators has had little effect on Amazon’s marketplace sales success.

There’s no question that pandemic-related lockdowns were the predominant factor behind the $791.7 Billion in sales reported for the US eCommerce market in 2020. And with Q3 sales of $214.6 Billion in 2021, it would only be fair to state that total sales for 2021 would exceed 2020’s figures considerably. But Q3 sales actually decreased by 3.3 percent compared to the previous quarter—in a market that’s still only 13 percent of retail as a whole. Yet as consumers have begun to adjust to what analysts are referring to as the new normal, one thing is for certain. Digital commerce will continue to shape the retail experience in ways few of us could have predicted just five years ago.

The Supply Chain Crisis of 2021

While eCommerce may have seen an overall boost in 2021, the resulting success also placed a strain on an already fragile global supply chain that consumers were hardly prepared for.

By the end of 2021, Drewry’s composite World Container Index placed the average cost of a 40 ft shipping container at $9,481—a figure 80 percent higher than the previous year. But the 5.4 percent consumer price increase reported in June wasn’t simply the result of shipping container costs. The cost of raw materials also surged to an increase of 10 percent in 2021 even as China, one of the largest global exporters of raw materials, reported profits in excess of 92 percent for manufacturing profits in the month of March.

Fears of the effects of the supply chain crisis on the 2021 holiday season may have been palpable, despite President Biden’s announcement that he would be working in conjunction with transportation leaders and retailers to help relieve the anticipated burden on shoppers. Yet retail sales actually exceeded the holiday season of 2020 by 8.5 percent, with eCommerce accounting for close to 21 percent of that figure.

Yet the threat of further bottlenecks continues to loom into 2021, with recent estimates indicating that supply chain disruption could be responsible for revenue losses of up to $4 Trillion. As vendors move forward, the assurance of stability in their chain of logistics remains one of the more unexpected dilemmas in business growth.

2021: The Year of the Amazon Aggregator

If 2020 was the year of the third-party seller on Amazon, then 2021 was the year of the Amazon aggregator.

Recent estimates placed the amount of capital being poured into the Amazon aggregator market at $13 Billion, with leading giant Thrasio attracting $3.4 Billion alone in 2021. And with almost 90 aggregators vying for new sellers, bidding wars have already been reported in what some agencies have predicted as being a bloodbath. Yet if there’s a threat of oversaturation in eCommerce, it’s amplified for the Amazon aggregator market as both the strains on resources and lack of experience in managing an Amazon brand can frequently lead to underestimating the challenges of navigating the marketplace.

“One thing we always encourage brands to consider when making an exit is the background of an aggregator,” said Josh Levine, Managing Partner at Color More Lines. “They may be tech-oriented. They may even have basic knowledge of how eCommerce works. But how well do they understand the Amazon ecosystem?”

Not every private equity investor is suited for Amazon. And not every seller is suited for an Amazon aggregator. Sellers who are only concerned with short-term sales at high volume may not realize that successful aggregators are concerned with brands capable of maintaining long-term interest. And equity partners used to traditional tech rollups need to realize that if eCommerce is an entirely different beast, Amazon operates on an entirely different playing field; one in which the rules are subject to change without any notice whatsoever.

Will 2021’s Trends Continue into 2022?

As increased scrutiny in the form of antitrust acts continues to be a legitimate concern for even non-Amazon sellers, there’s no way of predicting the eCommerce landscape in 2022. New restrictions may emerge. But so will new solutions. And new trends.

The digital marketplace is only as strong as its brands. But unexpected factors will affect any brand, whether it’s the result of a global health crisis or a logistical nightmare. If there’s one thing 2021 has taught us, it’s that collateral effects can and will be unpredictable by nature. Adaptation is critical to a brand’s success. Because it’s longevity that matters in eCommerce—not quick sales.

Color More Lines provides white glove, global account management of Amazon, Walmart, and other eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.

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