Impact of COVID-19 on the Consumer Electronics Industry

When COVID-19 rampantly plagued the United States, brick and mortar retail sales plummeted as most in-store shopping experiences shut down. Despite the lack of foot traffic, many eCommerce and retail brands saw a huge increase in online sales come through.

According to the U.S. Department of Commerce, 2020’s second quarter saw all-time record growth in online retail and eCommerce. One industry that saw a particular increase in growth was the consumer electronics industry as more and more people started working from home and needed electronics in their home offices.

In quarter one of 2019, consumers spent over $138 billion online; just one year later, consumers spent over $200 billion during the rise of COVID-19. Spending was up by almost $62 billion year-over-year.

The online retail momentum seen at the beginning of the year is expected to continue; According to a Future of Tech report by NPD, Q4 2020 is expected to see 18% more sales in the consumer electronics industry than Q4 of 2019. This increase trumps the year-over-year change between Q4 2018 and Q4 2019, where sales only increased by four percent.

Purchases for Consumer Electronics & Entertainment Increase

With an increase in at-home work, eCommerce sales in the consumer electronics industry increased significantly. The online entertainment industry also saw rises as people tried to find ways to fill their free time. Some of the most notable categories with increased growth include monitors, which saw an 84% increase, notebook computers, which saw a 45% increase, printers, which saw a 59% increase, tablets, which saw a 37% increase, and mice and keyboards, which saw a 62% increase.

According to the Future of Tech Report, by NPD, Q4 of 2020 will see 18% additional growth in comparison to Q4 2019, which only received a 4% year-over-year growth from 2018.

Q2 2020 Online Sales Skyrocket

2020’s second quarter ranked as the highest year-over-year growth of any previously recorded second quarter in U.S history. Note that data retrieval of year-over-year numbers began in Q4 of 1999. Q4 of the year 2000 reached a 73.7% rate, which is the only period of growth surpassing the retail success in Q2 2020. Q2 of 2020 tripled the online retail performance of Q2 2019.

Ecommerce penetration in Q2 2020 reached 20.8%, which was up 6.1 percentage points for Q2 of 2019, which hit 14.7%. We have never seen a quarter or year that has increased in eCommerce penetration by more than 2 year-over-year percentage points. After President Donald Trump declared a state of emergency at the end of March, quarter one only saw two and a half weeks of increased retail spending; whereas Q2 2020 had a full three months to track increased eCommerce spending.

The stellar online eCommerce performance in Q2 2020 completely cancelled out the $41.23 billion decline seen in offline and brick-and-mortar spending. Online retail performance in Q2 maintained the same amount of sales, if not more; the only difference is that people were spending through online platforms rather than in person. Despite retail sales tanking in April, the overall retail industry performed better than expected. Overall sales in the retail industry, including online and offline, gained 2.2% year-over-year with a total of $964.47 billion in sales. Last year’s Q2 performance through all platforms hit $943.94 billion total.

Mid-Year Spending Reaches Unprecedented Heights

Though brick-and-mortar stores started opening up again in May, the beginning of Q2, eCommerce sales continued to dominate in the retail industry. When consumers chose to shop in store, many opted for curbside pickup and online pick up options over traditional in-store shopping. Much of shopping has shifted to online as well as alternative methods of purchasing products, rather than going into a store and shopping in person.

Despite in-person retail opening up more and more, trends show that online retail purchases will continue to increase. Some even suggest that around 30% of total retail revenue will come from current buying habits, including online shopping and curbside pickup ordering. An eCommerce provider, CommerceHub, suggests that online ordering will see a 109.9% increase year-over-year in the second quarter.

CommerceHub network retailers have seen online orders over the last six months in volume close to what is seen around the holiday season. Analysts suggest that numbers will continue to increase come the end of Q4 2020, potentially surpassing typical holiday online ordering numbers.

Increases in Shipping

According to a technology vendor, Convey, Q2 shipping in 2020 was up by 44.2% year-over-year. April hit the peak of shipments with a total 19 million packages sent; April saw a 59.6% year-over-year increase from April 2019 in shipping metrics. With such an increase in shipping, April 2020 surpassed 2019 peak holiday months, including November and December, in both growth and volume. Though May and June saw a slight decline from the peak in April, both months also performed on par with peak holiday seasons. Each month saw at least a 30% increase in year-over-year shipping.

Booming Online Sales in 2020

Throughout the first half of 2020, consumers spent $346.26 billion in eCommerce and online retail; This number is up by $80.42 billion, or 30.1%, from the first half of 2019. During the first half of 2020, online sales in the retail industry reached an 18.6% penetration. Overall retail sales via any channel reached $1.87 trillion from January–June 2020; during the first half of 2019, retail sales had only reached $1.8 trillion.

Though COVID-19 threw a wrench in this year’s plans in a variety of ways, the consumer electronics industry did not take as bad of a hit as one might think. In-person sales at brick and mortar stores certainly declined for a period; however, online retail and eCommerce sales have skyrocketed with projections to continue growing. 2020 might be one of the most unexpectedly successful years in the consumer electronics industry’s history.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s