This online shopping is not limited to one company. Other ecommerce stars, including Etsy and Shopify, whose software powers online businesses for millions of smaller stores, also posted unexpectedly low revenue growth or low expectations for the foreseeable future. An analysis by Mastercard found that US purchases fell for the first time in nearly a decade in March, while in-store purchases rose.
Unsurprisingly, ecommerce buying boomed as people huddled at home in 2020 and declined as many became more comfortable with in-person shopping and eager to spend again on travel, dining out and other personal activities. But companies didn’t really see this pendulum swing coming.
Facebook’s parent company, Meta, said last month that the sudden ad sales were partly due to online retailers becoming less eager to buy ads on Facebook when their sales were under pressure. “The acceleration of e-commerce led to excessive revenue growth, but we are now seeing that trend reverse,” Mark Zuckerberg told Meta Investors two weeks ago.
And Meta said last week it was slowing down its hirings.
All this cost cutting and lack of confidence in the future would have seemed wild six months or a year ago, when Meta, Amazon, Google and other tech companies had huge revenues and profits.
The question this raises is whether we’ve misjudged the past two years of technology-driven changes in consumer behavior. Yes, some of us who have picked up the habit of shopping more from home and zooming everything will continue to do so. But there has also been a return to the behavior of 2019. Last week I shook hands at a business meeting and wondered what happened to the prediction that the virus would end handshakes.
We still don’t know what ‘normal’ looks like in the US or elsewhere, and we probably won’t for a year or more as our spending habits adjust to higher prices, ongoing manufacturing and shipping issues, rising interest rates, ongoing coronavirus infections and a desire to frolic in the real world.
The new normal for shopping probably doesn’t look like the comeback for brick-and-mortar stores we’ve seen in the past six months, or the wave of online shopping from 2020. The collective behavior of millions of Americans is hard to predict. And that makes the whole technology shudder.
