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E-Commerce Retailers

Industry Insight


EFFECTS OF THE CORONAVIRUS ON THE Retail E-Commerce Updated August 26, 2020

  • Pandemic Impacts: One sector seeing positive demand growth from the COVID-19 pandemic is e-commerce.  While the retail sector has been heavily impacted overall, as consumers remain largely at home, e-commerce, which was already a growing segment, has grown significantly in 2020. Per U.S. Census Bureau data, adjusted e-commerce sales increased 14.8 percent and 44.5 percent for Q1 and Q2, respectively, over last year.
  • E-commerce Surge: The pandemic caused a surge in e-commerce sales across a wide variety of platforms, accelerating growth in online sales by as much as four to six years.  As of May 2020, online spending was up 77 percent on a year-over-year basis according to Adobe Digital Insights.  The by-online-pick-up-in-store segment grew faster than the overall e-commerce channel, growing 195 percent in May.
  • Supply Chain: Although there were some supply chain issues related to delayed import shipments at ports and reports of some warehouses being closed due to regional COVID-19 issues early in the pandemic period, most third-party logistics operations were considered “essential critical infrastructure” by the U.S. government. Although delivery times have slowed compared to pre-pandemic levels, the channel is delivering significant growth.
  • Valuation Outlook: E-commerce should remain busy throughout the balance of the year, although there have been winners and losers based on the segment.  Segments seeing high growth are healthcare, grocery, toys and play equipment, home office, cosmetics, books, video, music, games, athleisure apparel; weaker segments have included shoes, some categories of sporting goods, diamonds, and certain segments of apparel.
COVID-19: Industry Brief Meter - E-Commerce

Content Divider


Date February 2020

Current Trends

  • E-commerce sales comprised 14.6% of total 2019 retail holiday sales, with specialty apparel growing the most at +17% over 2018
  • E-commerce sales drove holiday sales, increasing 13.1% to $142.5 billion in 2019, from $126.0 billion in 2018, according to Adobe Analytics
  • Amazon’s one-day delivery initiative increased retail sales in North America by 21.6% in the fourth quarter of 2019
  • Recent industry research found that 67 percent of shoppers have used a buy online pick up in store (BOPIS) service in the past six months


By the numbers


E-commerce takeover: While shopping trends and habits continue to evolve, one thing has stayed consistent over the past decade is e-commerce growth. Despite a six-day shorter holiday selling season, e-commerce sales were a primary driver of 2019 holiday sales, increasing 13.1 percent to $142.5 billion from $126.0 billion in 2018, according to data from Adobe Analytics. This continues the trend of double-digit growth since 2014, which is expected to continue in 2020 and beyond, particularly as mobile sales continue to grow. With the average mall vacancy rate at an eight-year high as of Q3 2019, and a total of 9,300 stores closed in 2019 (over 5,800 in 2018), e-commerce remains the consistent bright spot for retail trade.

Holiday sales were mixed for 2019, with some retailers generating double-digit growth over 2018 and others with negative comparable store sales for the second year in a row. Creditntell recently noted “multiple trends, such as the rise of retailer-created holidays and year-round deals left many retailers struggling to capitalize on the season.” Ongoing tariffs on Chinese goods compounded issues for retailers, which were forced to stock up on inventory in advance of the September 1, 2019, increase from 10 to 15 percent on approximately $112 billion of Chinese imports, including clothing, electronics, and sporting goods. It should be noted that, as part of the phase-one China trade deal signed January 15, 2020, the United States agreed to cut tariffs from 15 percent to 7.5 percent in exchange for an agreement from China to purchase more American products.

Notwithstanding these challenges, e-commerce claimed a larger portion of holiday sales at 14 percent of total retail sales. Cyber Monday sales reached a new record of $9.4 billion, up 19.6 percent over 2018, according to Adobe Analytics. Mobile sales reached over $50 billion, representing 36 percent of holiday sales, with millennials making up the largest spending demographic across all channels. Many of the retail trends from 2019 will continue in 2020, led by a continued focus on omni-channel development, discounted pricing, and faster fulfillment and delivery services, which may require significant capital expenditures from retailers. In short, to compete in this evolving environment, retailers with brick-and-mortar locations must continue to develop their digital strategies, including sophisticated shopping apps and buy online pick up in store capabilities. Otherwise retailers risk being outperformed by their competitors.

Pickup and delivery innovations drive sales: Most e-commerce retailers must compete with Amazon in categories where they overlap. For 2019, Amazon’s net product sales increased to $160.4 billion from $141.9 billion in 2018, due in part to an initiative to deliver more orders within a one-day window. While the move to deliver more items in one day did drive higher sales, the company’s fulfillment costs also increased from $34.0 billion in 2018 to $40.2 billion in 2019. Based on recent reporting, “the company’s move to speed up its delivery to just a day appears to be changing consumer behavior, as it has before, and is granting it yet more share in retail, especially in North America where sales increased 21.6 percent in the fourth quarter [2019],” according to the Telsey Advisory Group. Major players including Walmart and Target leveraged their stores to speed up fulfillment in order to stay competitive. For smaller retailers, next-day delivery is often cost prohibitive, but many will offer incentives like free ground shipping to boost sales.

The advent of BOPIS has shifted the retail landscape, as more customers opt to pick up their purchases in a local store to avoid expedited delivery or Amazon Prime membership fees. The popularity of BOPIS has increased significantly with consumers and retailers over the past year, saving on shipping costs and cutting down on fulfillment times. A survey of U.S.-based retailers with annual revenues over $10 million conducted by Radial and NAPCO Research found that 67 percent of shoppers have used BOPIS in the past six months, and 98 percent of retailers that have adopted the practice have reported additional in-store purchases from their BOPIS customers, indicating that BOPIS customers tend to purchase additional items during pickup.

In an effort to drive sales, Kohl’s announced in April 2019 that it was piloting a program to accept Amazon returns in 100 of its stores. In July, the program was expanded to all stores. Michelle Gass, Kohl’s chief executive officer noted, “the nationwide rollout of the Amazon Returns program is our single biggest initiative of the year.” She added, “our top strategic priority is driving traffic, and this transformational program does just that. It drives customers into our stores, and we are expecting millions to benefit from this service.” As competition ramps up for retailers on price and customer service, initiatives like Kohl’s Amazon Returns program, one-day delivery, and BOPIS have become distinguishing factors.

Recognizing returns: Return rates are an important indicator of the success and quality of a particular SKU and help gauge customer confidence in products. A company’s normal-course return rate has a direct impact on sales capacity projections; a return rate in excess of 20 percent can indicate that a reserve may be needed to mitigate risk associated with a loss of customer confidence in the retailer.

A returns allowance off of gross sales is important when planning disposition strategies, especially for Internet retailers. In a traditional brick-and-mortar GOB sales event, a “No Returns/All Sales Final” policy is commonplace. However, the rate of returns from e-commerce sales tends to be higher than in-store purchases, meaning customers may expect the option to return merchandise in spite of an “All Sales Final” policy. Discussions on how returns are considered are a key component of an exit strategy. Depending on the nature of the business, the disposition agent may permit them for a period of time; however, that may not always be possible or practical. Lenders should be aware that, in situations where returns are not allowed, higher discounting may be needed.

Promotional pricing impacts final value: Asset-based lenders and borrowers should work to develop a clear understanding of the incentives needed to drive sales while remaining mindful of the potential impacts of various discounting options. Free shipping promotions, for example, may be something that customers are accustomed to. While continuing the promotion may be important to consumers, it also increases the expense burden. It is not uncommon for free shipping to average $4.00 to $10.00 per transaction. As GOB sales multipliers for Internet retailers are typically closer to normal-course selling rates (or lower) for brick-and-mortar retailers, a free shipping offer has the potential to represent a significant expense based on the level of inventory, number of units, and average transaction size. Lenders should look to qualified appraisers to help understand shipping expense assumptions in valuation reports.

Secure agreements to utilize available third-party services: In cases where a third party manages e-commerce functions, lenders should examine all related legal agreements to ensure inventory can be sold through all relevant channels. The ability to utilize third-party services to maintain normal-course sales and fulfillment operations is essential. As an example, contract agreements may dictate that certain payment thresholds be met, even in the case of a total liquidation of assets. While appraisals typically assume the ongoing use of third-party services, this could pose a major stumbling block if overlooked.

Note: This publication is provided for informational marketing purposes only. The material contained herein should not be regarded as advice, nor relied upon to make financial, operational or other decisions; nor should it be used as a substitute for an asset appraisal. Actual recovery values may vary from transaction to transaction and the recovery values referenced herein are for representative transactions without regard to specific key factors. This material may be redistributed only in its entirety, including notice of copyright. All rights reserved. ©2020 Gordon Brothers, LLC.

Reference sources: Retail dive,, forbes, creditntell, U.S. census bureau, national retail federation, mastercard,, napco,, npr, cnbc, business insider, moneywise, Telsey Advisory Group, adobe analytics