Global consumers spend nearly $1 trillion extra during pandemic

E-commerce spend around the world increased by over $900 billion during the pandemic, according to research from Mastercard.

A study by the payments giant’s Economics Institute found that online shopping made up around $1 of every $5 spend on retail last year, an increase from roughly $1 in every $7 spent in 2019.

The report explores how covid-19 contributed to retail’s digital acceleration and how much of that digital spending is expected to stay permenant by country and sector.

The research revealed that economies that were already digital leaders before the crisis experienced larger gains in the domestic shift to digital, with those gains looking to be more permanent than countries that were late adopters or had a smaller share of e-commerce before the crisis.

Essential retail sectors, including grocery, which had the smallest digital share before the crisis, saw some of the biggest and more permanent gains as consumers adapted. In fact, the payments provider said that grocery would have the most digital longevity from the e-commerce surge.

“With the greater ease of purchasing online, competitiveness among producers increases, leading to more consumer options and improved prices driven by business innovation across the supply chain,” said the company. “However, when given the opportunity, we believe many shoppers will return to stores and in-person recreational activities, where the transaction, not the experience, is often digital.”

Mastercard also estimated that coronavirus lockdowns accelerated the transition from cash to digital payments in-store in the U.S. by one year.

"The pandemic may be the purest test of the world's progress towards digitalization to date," said Bhaskar Chakravorti, dean of global business, The Fletcher School at Tufts University. "Proving in the starkest possible terms how dynamic digital economies have been most resilient to the economic turmoil and are best positioned for future growth."

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