Complex Made Simple

Mastercard: eCommerce a COVID-19 lifeline for retailers

As COVID-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online

Online consumer spending growth in the UAE driven by a 21% YoY jump in number of online shops Number of high-volume eCommerce trading partners increased 44% YoY in UAE Grocery and discount store digital gains look sticky

As COVID-19 kept consumers around the world at home, nearly everything from groceries to gardening supplies was purchased online. According to Mastercard’s latest Recovery Insights report, this amounted to an additional $900 billion being spent in retail online around the world in 2020. Put another way: in 2020, e-commerce made up roughly $1 out of every $5 spent on retail, up from about $1 out of every $7 spent in 2019.

For retailers, restaurants, and other businesses – large and small-, being able to sell online provided a much-needed lifeline as in-person consumer spending was disrupted.

Roughly 20-30% of the COVID-related shift to digital globally is expected to be permanent, according to Mastercard’s Recovery Insights: Commerce E-volution. The report draws on anonymized and aggregated sales activity in the Mastercard network and proprietary analysis by the Mastercard Economics Institute. The analysis dives into what this means by country and by sector, for goods and services, and within countries and across borders.

In the UAE, the increase in online consumer spending was primarily driven by a 21% YoY jump in the number of online shops, in addition to a 44% YoY jump in the number of high-volume eCommerce trading partners from 2019 to 2020.

“While consumers were stuck at home, their dollars traveled far and wide thanks to e-commerce,” says Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “This has significant implications, with the countries and companies that have prioritized digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital.”

While the digital transformation has been neither universal nor consistent – due to geographical, economic, and household differences – the report uncovers several key overarching trends: 

  • Grocery and discount store digital gains look sticky: Essential retail sectors, which had the smallest digital share before the crisis, saw some of the biggest gains as consumers adapted. With new consumer habits forming and given the low pre-COVID user base, it is anticipated globally that 70-80% of the grocery e-commerce surge to stick around for good.
  • Global International eCommerce rose 25-30% during the pandemic: International e-commerce got a boost both in sales volume and the number of different countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25-30% year over year from March 2020 through February 2021.
  • Consumers increase their e-commerce footprints, buying from up to 30% more online retailers: Reflecting expanded consumer choice, our analysis shows that consumers worldwide are making purchases at a greater number of websites and online marketplaces than before. Residents in countries like Italy and Saudi Arabia are buying from 33% more online stores, on average, followed closely by Russia (29%), UK (22%) and the UAE (21%).