E-commerce penetration in the US is expected to speed up by a couple years because of the massive shift to online shopping during the COVID-19 pandemic, according to Morgan Stanley.
In a note published on Monday, Morgan Stanley wrote that 2020 could be an "inflection year" for e-commerce as coronavirus-driven factors push more people to buy things online. Those factors include shelter-in-place policies, lower spend on "experiences" like restaurants and travel, and government stimulus checks, according to the note.
As a result, Morgan Stanley estimated e-commerce would account for over 23% of US retail this year, up by more than 5 percentage points from the previous year.
"Stepping back, we think 2020 will be a year in which we pulled forward ~2 years of e-commerce penetration," the note said.
Morgan Stanley said the shift to online shopping was likely permanent because there's a growing pool of dollars available to capture for e-commerce companies. For example, more than 3,000 physical retail stores are expected to close this year, while retail and restaurant spending in general is forecast to drop by 18% in the second half of this year, the note said.
In fact, e-commerce captured only 12% of the $170 billion in available dollars from lost retail sales during the month of April but still managed to grow 58% year over year, or four times faster than the year before, according to Morgan Stanley estimates.
On top of that, the structural change in shopping behavior, spending amount, and available categories, like groceries, are only accelerating this change, it said. The biggest beneficiary of this trend would be Amazon and Walmart, the note added.
"While the world is now re-opening, we expect these buckets of available dollars (and the structural e-commerce behavior changes above) to remain e-commerce tailwinds," the note said.
