The Myth Of The Great E-Commerce Acceleration

Steve Dennis
4 min readApr 21, 2022


One of the most pervasive retail industry narratives is the belief that online shopping growth was massively accelerated by the pandemic. Set your WABAC Machine to the spring of 2020 and you’ll find scores of references to how we experienced “10 years of growth in only 3 months.” Even with the big (and easily predicted) moderation that occurred later that year, the “great acceleration” story line persists to this day.

There’s only one little problem: it’s simply not true. On average, e-commerce penetration is only slightly ahead of where we would expect it to be had the pandemic not happened. And as much fun as it is to call bulls*** on people who get paid to know better, the much bigger problem is that if you bought into this fallacy you might well have done the precise opposite of what you should have.

Facts Are Stubborn Things

You don’t have to be a statistician to fit a trend line to the featured graph of US Census Bureau data featured in last week’s Wall Street Journal article on shoppers’ shift back to physical retail. My fellow Forbes contributor Jason Goldberg calculated that “non-store” sales (a decent proxy for “e-commerce”) were up about 35% when compared to two years ago when the Covid crisis first hit. That’s significant growth to be sure. But when you consider that e-commerce’s compound annual growth rate has been around 15% over the past decade, that’s not even one year of acceleration.

The Future Will Not Be Evenly Distributed

Online shopping’s importance (and future growth potential) is often radically different by product category. For example, eMarketer estimates put online’s share of total grocery spending at around 5%, apparel and accessories at nearly 40% and books, music and videos at nearly 70%. Averages for such a big diverse industry can be misleading.

And clearly some material acceleration occurred. BOPIS, curbside pick up, and many other digital technologies achieved greater adoption than they otherwise would have. Online grocery and food delivery probably accelerated their growth by 2–3 years (though let’s see where we end up in 12 months time).

Just What The Heck Is “E-commerce” Anyway?

Even if it turns out that the material slow down in online shopping is temporary-or you operate in a category with significantly above average e-commerce penetration and/or growth prospects-the implications of continued growth require a far more nuanced perspective.

As I’ve been pointing out for years now, we often get a few things wrong about e-commerce. What we commonly call “e-commerce” (and what gets reported as online shopping revenue) merely reflects how the order is placed. It doesn’t tell us anything directly about how demand was generated, how the order was fulfilled, and which assets and capabilities are essential to creating competitive advantage.

You’re Probably Doing It Wrong

The big problem with buying into the “everything is moving online faster” narrative is that it most frequently leads to the conclusion that brick & mortar will become increasingly useless. And why would you want to invest in a depreciating asset? Why in God’s name would you open any stores? Why wouldn’t you instead invest aggressively in pure-play e-commerce brands and regional e-commerce fulfillment centers?

While plenty of physical retail is becoming irrelevant-I’m looking at you JC Penney-a whole lot is actually becoming ever more relevant and important. One of the best examples is Target , which rings up about 20% of its sales online, but fulfills some 95% from its brick-and-mortar locations.

As we discuss on this week’s episode of the Remarkable Retail podcast, prior to the pandemic (and despite all the retail apocalypse nonsense), Target doubled down on its stores, seeing them as the hub of a well harmonized customer experience. Despite the e-commerce surge, Target doubled down again earlier this year, announcing even more investment in stores and related technology to support its leading edge omni-channel capabilities. Defying “the software eats retail” narrative has led to spectacular results: Target’s stock is up nearly 350% over 5 years.

Your Mileage Will Vary

It’s quite likely that what gets booked as “e-commerce” revenue will grow at a much faster rate than than sales rung up in a physical store in the future. It’s possible that some exogenous factor and/or a bold new technology could dramatically change the slope of e-commerce share penetration down the road. Whatever further disruption occurs will almost certainly affect different retail categories and individual companies in disproportionate ways. Agility and adopting a culture of experimentation will be key.

But even more critical is being able to separate the signal from the noise. As it turns out, often what feels true is anything but.

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Steve Dennis

Keynote speaker & strategic advisor on retail innovation. Top 10 retail influencer. Senior Forbes contributor. Best selling author of “Remarkable Retail.”