In the past decade, online shopping remained mostly immune to price upswings because it did not rely on the usual retail costs that brick-and-mortar stores bear to get their goods on the streets. On top of production costs, there are store payrolls, rental and utility expenses, and supplies such as furniture and point-of-sale systems. On the other hand, online retailers only need to invest in a software and payment platform, warehousing – generally in low-cost areas – and shipping costs, which are generally discounted due to the larger business scale.
Up until the pandemic, e-commerce was even deflationary. Average online prices became lower and lower thanks to special offers and shopping days and the increased competition between suppliers, located domestically or abroad. Nowadays, rising grocery prices are the primary concern of online shoppers worldwide. Leading e-commerce segments such as beauty and apparel are registering double-digit price surges in the United States. Amazon’s median price increase reached 11 percent in beauty and seven percent in electronics in the previous 12 months as of August 2022.
Supply chain disruptions in the aftermath of the coronavirus outbreak and the impact of Russia’s war in Ukraine are behind this shift. The transport industry, on which e-commerce is heavily reliant, is tightly tied to oil prices and ranks as one of the sectors most affected by inflation in major emerging economies such as Turkey or Brazil.
Inflation hits online grocery shopping hard
Food and beverage is one of the e-commerce segments where shoppers struggle the most with price hikes. Besides being at the top of the list of global consumers’ concerns, rising grocery prices affect the wallets of six in ten online shoppers in the United States and Canada. Grocery is also the category where most Mexicans notice inflation. When buying food, consumers also worry about ‘shrinkflation’, a strategy retailers may use to counteract the effects of inflation by shrinking package sizes. This is a common issue when shopping for edible products such as snacks, pantry items, and frozen food.How are consumers dealing with online inflation?
Humans are, after all, adaptable creatures. With inflation getting hold of online shopping, some e-commerce trends have gained strength, such as buying and selling pre-owned goods. Over 90 percent of U.S. consumers have resorted to ‘recommerce’ to avoid bearing the increasing cost of new products. More than half of respondents also intended to shop secondhand more frequently in the future. On Amazon Prime Day, waiting to buy something at a lower price or passing on non-necessary items were U.S. shoppers’ main strategies to fight inflation.Nonetheless, the shopping experience has not remained unscathed. In France, rising prices prevent over two-thirds of surveyed buyers from enjoying themselves while shopping, once a less worrisome and more entertaining activity for many.
