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XEcommerce Expected To Hit $1 Trillion in Sales by 2022
Breanna de Vera is dot.LA's editorial intern. She is currently a senior at the University of Southern California, studying journalism and English literature. She previously reported for the campus publications The Daily Trojan and Annenberg Media.
Ecommerce sales ballooned during the pandemic and are expected to get even bigger — hitting the $1 trillion mark by 2022.
That's according to a study released by Adobe Analytics that found the lockdown economy has helped boost online shopping by an extra $183 billion since March 2020. That is a 20% growth, roughly the size of last year's holiday shopping season when buyers spent $188.2 billion online.
The report predicts it will only continue. Shoppers spent $813 billion online last year, up 42% from 2019. This year's spending is estimated to be somewhere between $850 billion and $930 billion. That means that by 2022 ecommerce spending might break the trillion dollar threshold for the first time.
"The pandemic has fast-forwarded ecommerce, driving levels of online sales we had not expected to see for a couple years. And consumers are not going back," said Adobe Digital Insights director Taylor Schreiner in an email. "People who successfully purchased loungewear in the last year for instance, are less concerned about the lack of a dressing room moving forward."
One of the biggest growth sectors have been online grocery shopping, with the rise of Instacart and grocery delivery services. Over the first three weeks of February 2021, it grew 230% in comparison to January 6 to January 26 the previous year, before the pandemic struck. Sporting goods also saw a 75% growth in that same period.
The way people shop is also changing — curbside and in store pickups of online orders grew 67% when comparing February 2021 to the previous year. Adobe surveyed 1,000 consumers, finding 30% actually preferred these pick up options to delivery.
"For many retailers, this service is no longer [just] 'nice to have.' Consumers value the convenience and speed, and it'll evolve how physical storefronts are developed moving forward," said Schreiner.
Buyers are also more likely to use a delayed payment option — selecting the option for "Buy Now, Pay Later" to place orders that are 18% larger — than standard payment options. This payment method grew 215% for the first two months of this year, in comparison to last year, which Adobe analysts attribute to "consumers [dealing] with financial uncertainty."
As customers were delaying paying, they were also shopping more. People spent more time scrolling throughout the day as bots reminded them of what was left in their cart.
Adobe's analysts note that "online shopping became a ubiquitous daily activity during the pandemic."
Sales and holiday shopping became less important. Memorial Day, Labor Day and President's Day all brought in less revenue than other days that same week. Even the traditional online holiday shopping spike — which usually lasts from Thanksgiving to Cyber Monday — dipped 9% from last season's haul, a change of $600 million.
The Digital Economy Index uses real time data from Adobe Analytics, which analyzes over a trillion site visits and online transactions across 100 million product SKUs.
"On a state level, California grew 35.4% year over year in the first two months of 2021," said Schreiner. "This is impressive growth for a market that was already adopting ecommerce at high rates prior to the pandemic."
According to HGInsights' index, more California companies use Adobe Analytics to track consumer behavior than other states.
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Breanna de Vera is dot.LA's editorial intern. She is currently a senior at the University of Southern California, studying journalism and English literature. She previously reported for the campus publications The Daily Trojan and Annenberg Media.
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LA Tech ‘Moves’: LeaseLock, Visgenx, PlayVS and Pressed Juicery Gains New CEOs
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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LeaseLock, a lease insurance and financial technology provider for the rental housing industry named Janine Steiner Jovanovic as chief executive officer. Prior to this role, Steiner Jovanovic served as the former EVP of Asset Optimization at RealPage.
Esports platform PlayVS hired EverFi co-founder and seasoned business leader Jon Chapman as the company’s chief executive officer.
Biotechnology company Visgenx appointed William Pedranti, J.D. as chief executive officer. Before joining, Mr. Pedranti was a partner with PENG Life Science Ventures.
Pressed Juicery, the leading cold-pressed juice and functional wellness brand welcomed Justin Nedelman as chief executive officer. His prior roles include chief real estate officer of FAT Brands Inc. and co-founder of Eureka! Restaurant Group.
Michael G. Vicari joined liquid biopsy company Nucleix as chief commercial officer. Vicari served as senior vice president of Sales at GRAIL, Inc.
Full-service performance marketing agency Allied Global Marketing promoted Erin Corbett to executive vice president of global partnership and marketing. Prior to joining Allied, Corbett's experience included senior marketing roles at Disney, Warner Bros. Studios, Harrah's Entertainment and Imagi Animation Studios.
Nuvve, a vehicle-to-grid technology company tapped student transportation and automotive sales and marketing executive David Bercik to lead the K-12 student transportation division.
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
This Week in ‘Raises’: Curri Scoops Up $42M, Mosaic Scores $26M
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
A local logistics platform raised fresh funding to put toward product development, infrastructure and sales and marketing initiatives, while a San Diego-based fintech company closed its Series C funding round to expand its investment in AI which will empower high-growth SMB and mid-market finance leaders.
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Venture Capital
Curri, a Ventura-based logistics platform, raised a $42 million Series B funding round led by Bessemer Venture Partners.
San Diego-based financial platform Mosaic raised a $26 million Series C funding round led by OMERS Ventures.
AHARA, a Los Angeles-based startup focused on providing personalized nutrition suggestions, raised a $10.25 million seed funding round led by Greycroft.
Per an SEC filing, San Diego-based developer of peptide therapeutics designed to assist in the treatment of autoimmune diseases and disorders selectIon raised $5 million in funding.
Miscellaneous
Los Angeles-based Sensydia, a company working on non-invasive cardiac diagnostics, said this morning that it has received $3 million in a NIH grant.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Why a Downturn in Esports Investments Isn’t Something To Fear
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
Last year, global venture capital investment in esports dropped by more than 40%. Investors have been rapidly selling off teams and franchises, and the industry has witnessed a consistent decline in ad spend. This has prompted many critics to coin the term “esports winter,” referring to a fall-off in the industry, an indication that VCs believe their investments didn’t achieve success as expected.
A recent article in The New York Times highlighted two major esports leagues that recently divested from their teams: Madison Square Garden sold its team CounterLogic Gaming to NRG in April, while Team SoloMid sold its League of Legends Championship Series team in late May.
Arguing that the industry still has potential for growth, several gaming executives at a LA Tech Week panel said that instead of an “esports winter,” the industry was experiencing a period of “normalization.” The panel at SoHo House in West Hollywood featured Brian Anderson, CEO of Culver City-based esports outfit FlyQuest Sport, Gene Chorba, head of developer relations at Roku and Felix LaHaye, founder of United Esports.
“I'm actually very skeptical of the claim of an esports winter,” Anderson said. “I think that what I'm seeing in the market right now, ultimately, is just a lot of venture capital firms that deployed capital into the eSports space that are not generating the returns that they were looking for, and have now done the press junket and are labeling it an esports winter.”
“In reality,” Anderson said, “esports, in my view, is alive and well.”
Anderson said there were a lot of “unrealistic expectations” around esports since it became popular in 2016, and the current decline was a sign that the market was correcting itself. “This is a necessary pain point that any nascent industry is going to go through as it matures and develops, and I think that in, let's say, 24 months, 36 months, esports will be in a much better financially sustainable place,” he said.
“I think we're having a little bit of a normalization,” Chorba said. “We saw the entire economy was being shot to the moon, with nothing behind it… we were seeing valuations of companies, public and private, that just didn't make sense for what they were building.”
Other tech industries have experienced a similar “normalization” in recent years. Cryptocurrencies, NFTs and big tech have all seen a downturn in recent months after being flooded with VC interest for many years.
According to the panelists, the existing viewer base for esports was a clear sign that the industry still had potential for growth. “There's still a ton of attention on professional video games. There's still so much grassroots fan support,” Anderson said. “As long as organizations and developers are able to figure out how to actually monetize that fan base, I think esports is still alive and well and here to stay for a long time.”
According to Insider Intelligence in 2022, there were 532 million esports viewers globally, with nearly 30 million viewers in the U.S.; this is expected to increase to 34.8 million by 2026.
Chorba explained that the reduction in ad spend and brand deals in esports shouldn’t worry investors because these crucial revenue streams have slowed down for other industries as well. “Ad-supported is hemorrhaging money and really just trying to wait out what's really a bad economy right now,” he said. As more people stop paying for cable, Chorba said, eyeballs will move onto streaming sites like YouTube or Twitch to watch gaming content.
LaHaye and Chorba said that one of the reasons for the decline in esports investments could be that executives and VCs are running esports companies like tech or SaaS companies. “As a matter of fact, they are not tech companies. They are ad-supported entertainment products,” LaHaye said.
By taking their companies to IPOs too early, certain esports companies ruined their chances in the market, LaHaye added. “There's also a downswing that's done by a rush to [go] public,” he said. “There are some fairly poor business models in esports that are going through a rougher time.”
“[Game publishing] is a hit-making business,” LaHaye said. “I think there tends to be confusion between what is a fundamental issue for the esports industry itself and some business models within the esports industry being bad business.”
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Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.