US eCommerce Disruption 5.0: Growing Off Pandemic Pull-Forward

THE COWEN INSIGHT

Cowen’s research team published its 5th annual eCommerce Disruption report—a deep dive known for its thoughtful framework and approach for quantifying eCommerce’s penetration across all retail sectors.

In the report, Cowen has updated its US eCommerce vertical model, suggesting total sales of $932BN in ’22, +12% y/y, and 15% retail penetration. Cowen now expects US eCommerce sales to rise 12% in 2022 and to compound annually at 11% from 2022-2027. This growth is driven by the pandemic’s pull-forward momentum and demand surge. Other factors include, stabilizing store counts and the next frontier in eCommerce: Food & Beverages, Consumables, Home & Auto.

THE IMPACT OF THE PANDEMIC

The pandemic accelerated consumer purchasing habits across various Digital marketplaces and sectors.

• Our proprietary data shows unprecedented online grocery adoption as US online grocery users doubled during the pandemic.

• Incremental US eCommerce sales rose to $132BN on avg '20-'22, up vs ~$50BN from '15-19.

• From '20-'22, we estimate ~$132BN in average annual incremental US eCommerce sales vs. ~$53 billion on average annually the five years prior to the pandemic.

The pandemic has also curved its disruption of brick-and-mortar commerce for the time being. Cowen’s COVID tracker shows consumers have maintained adoption of eCommerce services and delivery while returning to physical stores. Our US retail store closure database implies the second year of fewer closures. However, stabilizing store counts in ‘21/’22 may be near-term, as rising eCommerce tends to drive brick-and-mortar consolidation.

THE NEXT FRONTIER IN ECOMMERCE GROWTH 

Cowen expects the next wave of eCommerce growth to be led by Food & Beverages, Consumables, Home, and Auto.

• We estimate Food & Bev and Consumable segments will account for 33% of incremental eCommerce spend in ’22 vs. ~25% (on avg) over the prior five years. Home & Auto should also drive growth in the coming years.

• This new frontier should also drive eCommerce growth in ’23-’27, accounting for 34-43% of incremental eCommerce sales per our estimates, well above pre-COVID contributions.

• We forecast nearly $130BN incremental US eCommerce sales in '23-'27 given ample runway for the continued online shift in several large retail verticals led by Food & Bev, Consumables, Home, and Auto. 

THE LAST-MILE DELIVERY RACE 

A key finding of the report is that a major eCommerce platform will continue to extend its last-mile delivery advantage over emerging Instant Commerce Platforms and Gig delivery platforms during the pandemic. Investments will also support US eCommerce growth over the past two years in last-mile delivery fulfillment, enabling faster delivery for pure-play eCommerce marketplaces and brick and mortar digital offerings.