Online Sales Projected To Settle At 16.5 Pct Growth Rate

Social commerce continues its pandemic-driven momentum as Instagram announced two major moves in the area and new research shows the platform will see substantial new growth across the board.

On Tuesday (June 23) Instagram announced it was opening social shopping to more businesses including its own influencer community. On Wednesday it followed that with the biggest cosmetics retailer, Sephora. The two companies are creating a new digital storefront that will enable shoppers to pay for a product with checkout directly from the shopper’s feed or stories. Sephora says it has put 80 of its brands onto Instagram checkout.

“Sephora is thrilled to work with Instagram on this unique social shopping experience,” Carolyn Bojanowski, SVP and GM

While web users have harnessed eCommerce in numbers that haven’t been seen before amid the COVID-19 health crisis, eMarketer forecasts the worldwide retail online shopping sales will slow down to a 16.5 percent growth rate this year down from 20.2 percent in 2019. The firm forecasts an overall $3.914 trillion in online shopping sales in 2020 per an announcement.

eMarketer said nine nations are forecast to experience over 20 percent growth in retail online shopping sales in 2020, headed up by Malaysia, Spain and the Philippines. Those countries faced strong impacts from the pandemic per the announcement.

Moreover, Asia-Pacific will comprise 42.3 percent of retail sales, Western Europe will account for 16.2 percent and North America will take 22.9 percent. And 62.6 percent of all digital sales will occur in Asia-Pacific.

The company had predicted that worldwide retail would grow by 4.4 percent to $26.460 trillion this year prior to the pandemic. The measurements had been 18.4 percent growth and $4.105 trillion in sales for online shopping.

But eMarketer dropped its retail predictions by more than 10 percentage points and its online shopping outlook by 2 percentage points. The move decreased its overall retail online shopping sales forecast by $190.79 billion.

In April, news surfaced that Forrester predicts that worldwide retail sales this year will fall by an average of 9.6 percent throughout the globe. The company also predicts that it will take four years for merchants to catch up with pre-pandemic levels.

Forrester Principal Forecast Analyst Michael O’Grady said in a previous announcement, “COVID-19 is significantly impacting the global retail landscape.” O’Grady continued, “Retail categories like grocery and essential consumables are performing well, while other categories like fashion, beauty and cosmetics are seeing a marked decline in consumer spend.”

The analyst noted that there will be a sizable drop in retail sales around the world this year, especially with non-essential goods not sold via digital. eCommerce sales, however, will be “more resilient,” he said.

f eCommerce for Sephora, said in a press release. “Our clients engage with social media in so many ways, like drawing inspiration from the community, getting tips from experts or learning about new beauty trends so we’re always looking for new ways to enhance that beauty journey. We’re excited to deliver Instagram checkout, a new, seamless, direct, and secure way to shop across our brands’ accounts, while still getting the perks of being a Sephora client.”

Instagram checkout will allow shoppers to shop and purchase directly without leaving the Instagram app. Those purchases will then be part of the company’s loyalty program, including earning Beauty Insider points, Sephora client service and the company’s return policy.

New data from Forrester and Bloomreach show that Instagram’s moves are on the right track. Its research shows that even before the current pandemic crisis, 90 percent of business decision makers said digital commerce will become their company’s most important sales channel within one to three years. The sentiment was fairly dramatic: 87 percent said that if they don’t succeed in digital, they will not have a business.

“The pandemic will accelerate these plans for many,” says Forrester. “Pre-COVID, almost half of decision makers planned to increase budget for their offline stores … The pandemic has caused businesses to quickly shift spend from offline to online. Investment in offline has been cut in half. Instead, most plan to increase their investment in online channels like web, apps, social, and third-party marketplaces. On top of that, 60% plan to increase investment in new-to-them digital channels, and 62% will invest in mobile channels, i.e., web or app.”

If the Chinese economy, which has more distance from the height of the pandemic than the U.S., is any indication, social commerce will be a force in the eCommerce space. According to eMarketer, social commerce sales in China totaled $186.04 billion (RMB1.285 trillion) in 2019 — nearly 10 times the level in the U.S., which reached $19.42 billion in 2019.

“Investment in the social commerce space by Tencent’s WeChat — particularly with the 2017 launch of its lite apps called Mini Programs — has certainly helped garner trust and bolster usage among the general public,” says eMarketer. “To date, many major online retailers and brands in China have created Mini Programs to sell their products directly within the WeChat platform. In its annual report, Tencent said that the total transaction value generated by its Mini Programs in 2019 was more than $115 billion (RMB800 billion).”