Driven by the accelerated pace of digitalization amid the COVID-19 pandemic, online retail is expected to double its size over the next five years, revealed the Economist Intelligence Unit (EIU) in its latest report.
As per EIU’s report titled Digital Disruption: Risks And Opportunities In The Shift To Online, using data from Edge by Ascential, estimates that online retail sales in the 60 biggest economies surged by over 30% in 2020.
In 2021 EIU expects further growth of 18% in online sales, and by 2025 they are likely to account for nearly 20% of total retail sales, up from 10% in 2019.
The report was of the view that even sectors that have traditionally been less reliant on digital sales, such as automotive, will change. “We expect online sales to account for nearly one-quarter of new car sales by 2025, from less than 5% before the pandemic,” read the report..
The report said that acceleration in digitalisation over the past year has been caused by lockdowns, which have forced both consumers and businesses online. Over the next two to three years, the rollout of vaccines protecting from Covid-19 will (if all goes well) make stay-at-home policies less necessary as the threat from the coronavirus fades.
“However, the digital economy will carry on expanding. Some consumer habits are likely to have changed permanently, while companies have spotted opportunities amid the disruption,” it said.
On digital finance, EIU expects that digital payments will soar in tandem with the rise in online retailing, but will also penetrate further into real-world retailing as customers and sellers seek to avoid contact with cash and cards.
“Regions with low levels of banking or card penetration, but high smartphone penetration, will make a particularly rapid switch to digital payments systems, as companies such as WhatsApp Pay (US) and Ant Group (China) roll out new services,” read the report.
The report expects that financial firms will shift more customers to online and mobile platforms, adopt remote claims management, promote passive investment strategies, and use roboadvisors.
“To speed up monetary transactions, we are likely to see new interbank payment services, along the lines of India’s Unified Payments Interface and Brazil’s PIX. China and other countries will accelerate their experiments with central bank digital currencies, encouraged by the introduction of Facebook’s scaled-back digital currency, now called Diem,” it stated.