In a quarter that benefited from an Amazon Prime Day sales bump, United States ecommerce spending grew 10.8% year over year in Q3, according to a Digital Commerce 360 analysis of U.S. Department of Commerce figures released Friday.
That marked the first double-digit jump in online sales after four consecutive quarters of single-digit growth as the pandemic receded and shoppers returned to stores.
Are ecommerce sales growing in 2022?
While the record online sales spikes in 2020 and into the first months of 2021 have tapered off, quarterly ecommerce sales are still growing this year.
Digital revenue hit $251.71 billion in the third quarter. That was up 10.8% from $227.23 billion for the same period the prior year, according to Commerce Department data. That was higher than the 9.4% U.S. ecommerce growth registered in Q3 2021 but less than a quarter of the 49.7% surge early in the pandemic during Q3 2020.
What contributed to Q3’s ecommerce growth?
Here’s what’s important to remember to put these numbers into context:
How does Q3 stack up historically?
- Online sales growth for the third quarter was one of the lowest year-over-year Q3 increases in the last two decades. Outside of the 9.4% registered in Q3 2021, the only other smaller upticks came during the recession in 2008-2009. But it’s still notable that retailers could grow digital revenue during the three months given the massive — and some speculated, unsustainable — bump in web sales as COVID-19 raged and U.S. consumers shopped from home. The U.S. ecommerce market has managed to maintain and even build upon those early pandemic shifts in consumer buying behavior.
What was Amazon Prime Day’s impact?
- This year, Amazon.com Inc., No. 1 in the Digital Commerce 360 Top 1000, moved its popular annual Prime Day promotion to July from June. That meant the rescheduled two-day sales event fell in Q3 rather than Q2, as it had in 2021. The increase in online traffic around Prime Day typically translates into bigger sales for many retailers. So, this later date pushed higher ecommerce spending into a later quarter. Essentially, Q3 2022 is being compared to a Q3 2021 without the same Prime Day boost, which inflates growth this year.
How did top online retailers perform in Q3?
- The big three mass merchants — Amazon, Walmart Inc. (No. 2) and Target (No. 5) — accounted for nearly a third of the U.S. ecommerce market in 2021, Digital Commerce 360 estimates. Like prior years, this trio has an outsized impact on the performance of the whole market, and each reported Q3 earnings in the last few weeks.
- Amazon’s web sales grew 10.6% in Q3 when considering its online stores, third-party seller services and subscription services segments.
- Walmart announced a 16.0% jump in Q3 U.S. ecommerce sales.
- And Target reported fairly flat digital revenue growth for the quarter at 0.3%.
Collectively, this group’s online revenue grew at the same rate as the overall market — 10.8% — in the third quarter, Digital Commerce 360 estimates. (Amazon web sales include first-party sales plus marketplace commissions and subscription fees. The trio’s share of all ecommerce would rise to more than 45.0% when the sales of Amazon’s third-party sellers are added.)
What share of US sales is ecommerce?
More than $1 in every $5 spent on retail purchases came from online orders in the third quarter, according to Digital Commerce 360’s analysis of Commerce Department data. Online’s share of total retail sales rose 0.6 percentage points in Q3 2022 over the same period the prior year — 20.6% vs. 20.0%. But penetration was elevated when compared to the 15.0% digital penetration in a pre-pandemic Q3 2019. Since COVID-19 took hold in the U.S., online’s quarterly share of all retail spending has hovered in the 20%-23% range.
How is ecommerce penetration calculated?
Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online. These segments include restaurants, bars, automobile dealers, gas stations and fuel dealers. U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.
How much have total retail sales grown?
Sales through both offline and online channels reached $1.22 trillion last quarter, up from $1.13 trillion in Q3 2021, according to Digital Commerce 360’s analysis of Commerce Department data. The 7.7% increase was lower than the 10.5% swell in total retail sales for Q3 2021 but still elevated from pre-pandemic numbers.
Here’s what’s helpful to know:
- In the five years before COVID-19 hit, the median growth for total retail sales during the third quarter was 3.7%. The 7.7% lift in Q3 2022 was significantly higher than that. But it marked a continuation of the slowdown from the last half of 2020 and all of 2021, when quarterly growth registered double-digit increases. And it was a huge drop-off from the record 20.5% year-over-year surge in total retail sales, which was spurred by pent-up demand from newly vaccinated shoppers eager to return to in-store shopping.
- With a 7.0% year-over-year increase, sales through stores and other offline channels grew more slowly in the July-September quarter than the online segment, which hit 10.8%. That was a reversal from Q3 2021, when offline sales grew 10.8% and digital revenue saw a smaller rise of 9.4%.
- Ecommerce’s share of total retail gains in the quarter increased to 27.9% — the highest quarterly share since Q1 2021. In Q3 2021, online accounted for 18.1% of all additional spending during the three-month period.
Online retail sales so far in 2022
Here’s what retailers’ sales looked like through the first nine months of the year:
- U.S. ecommerce hit $735.12 billion, up 8.3% from $678.87 billion in the first three quarters of 2021.
- Online penetration reached 20.7%, up slightly vs. 20.5% from the same period last year.
- Offline sales increased 7.1% year over year, down significantly from 13.5% in the first nine months of 2021.
- Total retail sales reached $3.55 trillion, up 7.3% from $3.31 trillion in the first three quarters of 2021.
- Digital sales accounted for nearly a quarter — 23.2% — of gains in retail spending across all channels.
Percentage changes may not align exactly with dollar figures due to rounding.
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