Dive Brief:

• E-commerce in the U.S. grew 30% in 2020, its fastest growth rate since 2002, according to an emailed report from Forrester. Yet, the research firm projects that 72% of retail will still take place offline in 2024. 
• The fastest-growing e-commerce category in 2020 was food and drink, with combined online sales at Walmart, Target and Kroger nearly doubling. Forrester projects that 10% of all food and drink sales will be online by 2024.
• Clothing, accessories and footwear together captured 19% of all U.S. e-commerce sales growth even as overall apparel and footwear spending declined during 2020. Forrester projects that digital sales in the clothing category will reach 47.5% by 2024.

Dive Insight:

Last year was pivotal for e-commerce. Years' worth of growth was crammed into one year, while the industry hit a growth rate not seen since its early days.

While much of the spending online was driven by pandemic concerns, many analysts expected a good chunk of last year's growth to stick with many consumers becoming more accustomed to buying digitally. That includes categories, like food and home, that have remained relatively under-penetrated. 

It helped that retail, on the whole, with notable exceptions, had a surprisingly good year in 2020 amid widespread disruption and uncertainty. Many consumers, stuck at home, shifted their spending from travel and services to products.

The categories that performed the best last year reflect school closures and a self-isolating, pandemic-wary world. According to Forrester, video and DVDs grew 21.4% in 2020, toys grew 15.9%, video games 15.4%, computers and their peripherals more than 15%, tools and home improvement products 13.2%, pet products 13.2%, and books and sports equipment each around 12%. In each case above, 2020's growth rate was significantly higher than the growth in 2019. 

Also helping to drive e-commerce sales are online marketplaces such as Amazon's mammoth third-party platform. Forrester estimates that marketplaces drove 10% of total retail sales and 57% of e-commerce sales in the U.S. during 2020. If trends continue, marketplaces will account for more than two-thirds of e-commerce by 2023, according to Forrester. The firm also pointed to Shopify capturing 9% of U.S. e-commerce by helping direct-to-consumer brands 

With all that said, Forrester's projects reflect the physical store's lasting relevance to retail. The firm estimates that nearly three-fourths of all retail sales will take place offline and 66% of non-food-and-drink sales will happen offline. The report authors noted that "categories that require shopper touch and feel, need in-store advice, or are unplanned small-ticket-item purchases are more likely to be bought in-store." 

Retailers are making big investments today to blend their digital platforms with their store networks to make it easy for consumers to shop in the ways most convenient to them. The growth of both e-commerce and omnichannel sales add new costs and difficulties for retailers. But those retailers that can offer customers the best of both digital and physical shopping worlds are poised to keep growing.