COVID-19 radically shifted consumer shopping behaviors. Besides shopping more in already-familiar categories, consumers turned to e-commerce for a range of categories for the first time during the pandemic, permanently increasing the number of e-commerce shoppers. New shoppers, specifically baby boomers, also came online for the first time, driving the boom in researching products and services online, according to consumer survey data from Euromonitor International.
The big unknown in the industry today is what portion of this e-commerce spike will remain post-pandemic. According to Euromonitor International’s Voice of the Industry: COVID-19 Survey, 64% of industry professionals surveyed in July thought COVID-19 would drive a permanent increase in online shopping, up from 54% of those surveyed in April. E-commerce will remain a key growth opportunity for brands and retailers, underscoring the need to identify which countries and categories are best positioned to retain the surge in e-commerce unfolding globally.
The staff of an e-commerce warehouse are equipped with goods for sale during the recent National Day … [+]
Euromonitor International’s new E-Commerce Readiness Model* shows that the retail market globally could support more than $77.7 billion in additional e-commerce sales without further infrastructure expansion based on market dynamics entering into the pandemic. Industries currently with relatively low e-commerce sales like fresh and packaged food as well as alcoholic drinks have potential for significant movement toward online sales ($38.5 billion globally), while other more developed e-commerce industries like apparel ($3.4 billion globally) still show prospects for growth.
In a similar capacity, countries at varying stages of e-commerce maturity point to continued prospects for online shifts. From developed online markets like China and the US to emerging markets like India and Brazil, there is room to grow in nearly all geographies.
Euromonitor International
In China, one of the industries with the greatest e-commerce potential is alcoholic drinks. In 2019, China was the most penetrated market in the world in terms of channel share for alcoholic drinks in e-commerce. Even so, Euromonitor’s E-Commerce Readiness Model suggests the channel could be performing even better, topping the list for alcohol sales potential.
Spirits have the most opportunity within the alcoholic drinks e-commerce space in China, under-indexing by more than $7.5 billion based on Euromonitor’s E-Commerce Readiness Model. Local Chinese spirit Baijiu accounted for more than 95% of the country’s total spirits volume sales.
Some Baijiu manufacturers are teaming up with internet companies to increase online distribution and build digital marketing. For example, Anhui Gujing is cooperating with JD.com to launch smaller bottle volumes and herbal Chinese spirits. The company is also leveraging livestreaming in Gujing’s Baijiu Museum to showcase culture and processing techniques to online consumers. Wuliangye is going a step further. The company is leveraging digital platforms to manage distributors and take stronger control of price and volume. In addition, Wuliangye co-founded the China Alcoholic Business Big Data Center with internet companies, academics and associations to explore digitalization initiatives in the supply chain and consumer interaction.
Germany is another promising e-commerce market. Euromonitor’s E-Commerce Readiness Model identified Germany as the most under-indexed country for beauty and personal care, both in share of e-commerce sales as well as the sales potential.
Based on Euromonitor’s proprietary model, Germany could have achieved around $400 million more sales of beauty and personal care products through e-commerce in 2019. This is twice the amount estimated in South Korea, the second-most promising market based on potential e-commerce value.
In Germany, skin care is driving the e-commerce opportunity within beauty and personal care and is the most under-indexed category, both in share of e-commerce sales as well as the sales potential. Of the additional $389 million that the beauty market could have supported through e-commerce in 2019, approximately 30% would have come from skin care. Before the pandemic, skin care e-commerce was showing signs of significant growth while brick-and-mortar retailers continued to struggle.
The popularity of e-commerce retailers, such as Zalando, and online pharmacies, such as DocMorris and Apotheke.de, which offer heavily discounted personal care products, are predicted to continue growing post-pandemic, given strong market conditions for e-commerce in skin care.
China and Germany are only two market examples where there is significant unmet e-commerce potential, with alcoholic drinks and beauty and personal care industries offering some of the greatest opportunities in each, respectively. With e-commerce continuing to spike due to the COVID-19 pandemic, companies need to better understand which countries and categories are likely to see sustained e-commerce growth to make investment and resource allocations accordingly. This model helps companies anticipate long-term e-commerce growth, even after the pandemic subsides.
*The E-Commerce Readiness Model uses a Gradient Boosting Machine methodology that leverages more than 280 socioeconomic variables to identify market conditions that are most related to a higher share of e-commerce sales. The model then uses 7,000 data points that measure e-commerce sales by category and country as of 2019, in order to predict which markets will most likely support sustained e-commerce growth.
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