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US eCommerce Disruption 4.0: Pandemic Impact Has Staying Power

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THE COWEN INSIGHT

In our 4th annual eCommerce study, we find the sector reflecting outsized growth. Our updated US eCommerce vertical model suggests eCommerce sales will reach $1TN in ’22, roughly 2 years ahead of our prior estimate. This is likely because COVID-19’s impact on consumer behavior has some permanence.

We estimate US eCommerce sales of $867BN in ’20, +48% y/y. This increase is primarily driven by massive growth in the Consumables, Food & Beverage and Home verticals. We forecast >10K big brand store closures in ’20, largely due to COVID-19.

Online Grocery is at an inflection point, with users nearly doubling during the pandemic, including 32% of survey respondents using Online Grocery vs 18% a year ago

What makes Cowen’s Proprietary eCommerce Vertical Model unique?

  1. US eCommerce vertical model: provides investors with a clean framework for quantifying eCommerce’s disruption overall, and by vertical
  2. Proprietary Monthly Recurring US Survey: provides insights on COVID’s impact on consumers and years of data on AMZN trends
  3. Data from Cowen’s Retail Store Closure Database

COVID-19 Drives Massive Acceleration of US eCommerce Penetration

  1. Updated model suggests US eCommerce sales rise to $867BN in ’20, +48% y/y and to $1.4TN in ’25, a 10% CAGR
  2. COVID-19 consumer tracker data shows higher online shopping alongside a reticence to return to physical stores
  3. Our US retail store closure database implies >10,000 major chain / brand retail store closures in ’20 vs. ~9.2K in ’19
US eCommerce penetration by vertical (including media, toys, electronics & appliances, office equipment & supplies, sporting goods, clothing & accessories, furniture & home furnishings, consumables, food & beverage, gardeners equipment & supplies an auto
US eCommerce Penetration by Vertical, 2000 – 2025E
Source: Cowen; US Census Bureau

Looking Ahead Into ’21 and Beyond

We forecast US eCommerce growth of +11% y/y in ’21, despite the difficult +48% y/y comp in ’20. This could prove to be conservative as:

  1. eCommerce spend remains elevated per our data despite store re-openings suggesting some permanence to shifting consumer spend
  2. Accelerating store closures the past few years drives eCommerce spend shift
  3. Food & Beverage and Consumables are key growth drivers. We estimate they will account for 34% of incremental eCommerce spend in ’20 vs. 16-19% the prior 5 years.

These under-penetrated, high purchase frequency verticals will drive eCommerce growth in ’21-’25. They account for 36-37% of incremental eCommerce sales per our estimates, well above pre-COVID contributions. Home & Auto will also drive growth in the coming years.

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