- Morgan Stanley expects COVID-19 to pull forward the US e-commerce penetration rate by at least two years.
- The firm estimates e-commerce to account for over 23% of US retail this year, up by more than 5 percentage points from the year before.
- It said more people are shopping online because they're sheltered home, spending less on experiences like travel, while the government stimulus check is boosting purchases.
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E-commerce penetration in the US is expected to speed up by a couple years due to 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 estimates e-commerce to 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 is 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 (store closures/shelter in place) during the month of April, yet still managed to grow 58% year-over-year, or 4 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.
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