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How online commerce advanced while mobile lagged in the U.S.

By Michael Moeser
May 24, 2021 10:49 AM

The U.S. is the world’s largest economy, based on World Bank data, at $21.43 trillion with more than 330 million consumers — and while the pandemic may have slowed the nation down, U.S. merchants, particularly small businesses, have been resilient.

To endure, these shops relied heavily on e-commerce, even if it was new territory to them. They also adopted mobile commerce, but the U.S. still lags other countries in this activity.

“Of the merchants that survived the initial pandemic shock, they are thriving,” said Derek Webster, founder and CEO of CardFlight. “Merchants discovered the need to shift from purely in-store sales model to an omni channel one that includes online, delivery and curbside pickup.”

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The U.S. e-commerce market is massive standing at over $1 trillion in sales, based on data from JPMorgan Chase’s 2020 E-commerce Payment Trends – Global Insights Report. It’s also expected to grow at a 10.5% annual rate through 2023.

The retail environment is increasingly catering to consumers who want to shop from their homes as well as on the go. Chase reported that brick-and-mortar companies such as Walmart and Target are leveraging their large store infrastructures to avoid relying on services such as the U.S. Post Office.

Meanwhile, companies such as Amazon with its Prime membership are benefiting from consumer demand for immediate gratification. This has also spilled over to the delivery sector where firms such as Instacart, Shipt, Postmates and others are able to capitalize on the immediate delivery demand.
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Credit and debit cards are an important part of the U.S. e-commerce landscape. This card-first preference also carries over to many of the underbanked and unbanked consumers who opt to purchase prepaid cards instead of using cash on delivery.

E-wallets, such as PayPal, account for 23% of the total U.S. e-commerce payment volume based on data from the PPRO Payments Almanac. It can be expected that e-wallets will continue to grow in market share as they have been expanding into the in-store channel making them more usable when consumers shop in a more omni-channel environment.

Bank transfers are a relatively minor portion of the market, at 8%, as many consumers don’t see the value in using them and merchants typically don’t provide discounts for choosing a cheaper alternative to payment cards. In contrast, 52% of the German e-commerce payments volume is conducted through bank transfers.
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The U.S. is not a mobile-first e-commerce market, as it handily lags many countries, even developing ones, based on PPRO data. About 39% of U.S. e-commerce is transacted using a mobile device, compared to 50% for the world average.

Certain Nordic countries conduct more than half of their e-commerce through a mobile device. These include Sweden (61%), Norway (57%) and Denmark (51%), all of which built advanced telecommunications infrastructure over the years.

China, at 59%, is a world leader in mobile commerce. This is partly the result of the popularity of China's mobile wallets, Alipay and WeChat Pay.
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The cross-border e-commerce market is an under-developed opportunity in the U.S. as a majority of Americans have not shopped from an overseas merchant. Based on the Chase data, only 34% of American consumers have shopped from a merchant based in another region. The report noted that the two factors may be playing against foreign brands and merchants — low U.S. prices and fast availability of merchandise.

However, for the 34% of consumers who have shopped from a cross-border e-commerce merchant, two-thirds of the volume comes from just three countries — China, the U.K. and Japan.

Since China is one of the primary trading partners for the U.S. economy overall, it should come as no surprise that almost half of all e-commerce (49%) is transacted with China. The U.K. came in second at 12% and Japan rounded out third place at 7%.
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While the U.S. may be a laggard in mobile commerce, on an overall level of e-commerce penetration as a percentage of total retail sales, the U.S. is almost that the world average at 15% and 16%, respectively.

The effects of the pandemic have accelerated growth in e-commerce among many countries, with the U.S. being no exception. Before the pandemic, e-commerce as a percentage of total retail sales started 2019 with a 10% share and ended the year at 11.4, based on U.S. Department of Commerce data. According to both PPRO and Department of Commerce data, the year ended at 15% on a non-adjusted basis. In other words, the pandemic added roughly three to four percentage points in e-commerce penetration.
Michael Moeser
Senior Content Strategist, Arizent
Online payments Mobile payments
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