E-commerce Q2 2022 Review: Slimming Down — Part 2
The e-commerce industry is retrenching as penetration reverts to pre-pandemic levels. During the second quarter, focus shifted from growth to survival. Below, a look at how e-commerce companies are responding to lower demand. (Here’s part one of the series.) As always, thanks for reading.
The Covid Pump Fake
It’s usually a safe bet that tomorrow will look a lot like today. But some days — December 7, 1941 or September 11, 2001 — look very different from the preceding one. As Nassim Nicholas Taleb writes, history advances more by jumps than straight lines. Extrapolation, by definition, misses turning points, which are inevitable with long time horizons (even if they’re impossible to forecast).
The Covid-19 pandemic jolted the e-commerce industry with two jumps. First, with stores closed and people stuck at home with sourdough starter kits, e-commerce penetration spiked in 2020 and 2021. Second, this trend reversed. Penetration is now reverting to its pre-pandemic trendline.
The chart below is the best way to understand the present moment for e-commerce. During the initial spike, firms reacted to surging demand by adding headcount, increasing marketing budgets, and ramping up investment. With demand waning, this is now unwinding.
