Is In-Person Shopping Replacing E-Commerce Again?

Is in-person shopping coming back full steam? Is e-commerce on the decline?

E-commerce’s explosive pandemic growth appears to be moderating, with a growing number of shoppers returning to in-person shopping for items like clothes, food, and furniture. Some experts believe that e-commerce has peaked and is in decline, while others think it’s still going strong.

Keep reading for two views on the future of e-commerce.

The Future of Online Shopping

The Covid-19 pandemic fueled a boom in online shopping, accelerating the growth of e-commerce giants like Amazon and prompting a rush among traditional retailers to expand their digital presence. But three years later, Americans are eager to return to in-store shopping, highlighting the enduring appeal of the traditional retail experience even in a digital world—and potentially signaling the decline of the online shopping spree.

The Rise of E-Commerce

E-commerce remains a popular way to get goods. But Americans have more shopping options today than during pandemic lockdowns, and recent data suggest that as they return to in-person shopping, the e-commerce boom is moderating. In early August: 

• Top global online retailer Amazon reported second-quarter sales up just 11% year-over-year—a far cry from the 42% surge it saw in the same period in 2020.  
• Online furniture retailer Wayfair, a pandemic winner, suffered its ninth straight quarter of declining sales.  

Experts have mixed views on whether this means that e-commerce’s best days are behind or ahead of it.

View 1: E-Commerce Has Peaked

Some experts say it’s too soon to tell whether e-commerce has peaked, but that two factors suggest it may be trending in that direction:

• Online retail penetration has slowed. In early 2022, Mastercard found the first drop in e-commerce sales in nine years, with online purchases falling to 13% of total retail versus 15% in 2020.
• The extent to which e-commerce has been consistently adopted differs from one industry to the next. Online shopping trends diverged after the pandemic’s onset. While sectors like food delivery and telehealth remain elevated and ripe for continued growth, others like clothing, furniture, and groceries have seen declines and slowed growth recently.

View 2: E-Commerce Hasn’t Peaked

Other experts argue that although the breakneck growth of e-commerce during the pandemic may be slowing, the market has far from peaked. The industry is projected to exceed $1.1 trillion in sales in the US this year, with online purchases making up over 16% of all retail spending.

Rather than hitting a ceiling, experts say, the e-commerce sector is entering a new, more mature phase. Substantial potential remains for online retail to evolve through new technologies and strategies that deliver integrated, personalized shopping experiences that consumers want. These include: 

• Live shopping and shoppable media. 
  • Live shopping features a presenter who showcases products that viewers can immediately buy.
  • Shoppable media refers to digital content like social media posts, blogs, videos, or ads that consumers can click through to instantly purchase featured products directly from a retailer.  
• E-customization and Artificial Intelligence (AI) strategies help retailers understand consumer preferences to deliver customized shopping experiences that more customers are looking for today.
• Sensory-engaging shopping strategies. Some companies are leveraging technology to create immersive online shopping experiences that simulate in-person shopping.
• Gaming strategies. Some companies are using gaming techniques, such as competition and offering rewards, to draw shoppers in, encourage desired behavior, and collect valuable first-party data.

Innovative In-Person Shopping Experiences

Just as e-commerce retailers are striving to upgrade the shopping experience, so too are physical stores. Experts say that, in an effort to survive and stay solvent, malls are making a variety of physical and digital changes, including:

• Modernizing outlet malls by recruiting digitally native brands.
• Turning mall kiosks into international retailers hubs to introduce American shoppers to new products. 
• Launching pop-up stores to let lesser-known brands showcase their goods and pique curious consumers’ attention.

Adopting digital technologies such as “endless aisle concepts”—which enable brick-and-mortar retailers to use technology to expand their offerings beyond stores’ physical walls—and augmented reality experiences that enable customers to test products.

These upgrades, along with more in the pipeline, are keeping physical stores competitive with online retailers.

Looking Ahead

Although e-commerce offers undeniable convenience, physical stores provide a unique experience for customers to discover and engage with new products. Most experts agree that to survive and thrive, retailers will have to continue to adapt to shoppers’ emerging preferences, whether online, in physical stores, or both.

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