BGL Consumer Insider

eCommerce is Thriving Amid a COVID-Induced “New World”

Digital commerce is capturing a growing share of consumer and business-to-business sales, and COVID-19 is accelerating that trend, according to the Consumer Insider, an industry report released by Brown Gibbons Lang & Company (BGL).

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Managing Director

Market experts project the online channel will penetrate 16 percent of U.S. retail sales by 2023, an increase from 10 percent in 2018. U.S. B2B eCommerce share is projected to reach 17 percent by 2021, up from 12 percent in 2018. As a result of COVID-19, BGL’s Consumer eCommerce team anticipates a faster rate of growth and a shorter timetable to achieve these milestones as more brands and businesses go direct.

Consumer categories and channels are clearly seeing this shift:

  • Digitally-driven, enthusiast brands, particularly those focused on at-home (e.g. fitness, car restoration) or socially-distant activities (e.g. hiking, camping), are thriving in today’s environment. Passionate consumers are continuing to pursue their interests and hobbies, with enthusiast product demand more resilient to economic changes.
  • eCommerce is disrupting the luxury goods category, and not just the “value” end of the market. Globally, the online channel accounted for 12 percent of the luxury market in 2019, and by 2025, is expected to reach as high as 30 percent, more than doubling over the period. The struggles of luxury retailers like Barneys and Neiman Marcus are contributing to this shift, with direct-to-consumer selling strategies now critical for premium brands hoping to survive and thrive.
  • Specialty retailers are seeing a dramatic drop in foot traffic with the switch to online shopping. Niche brands with compelling brand stories are increasingly finding success by going direct and seeing a huge payoff both in customer loyalty and increased margins.

Investors are optimistic about the growth prospects for thriving online brands. Recent private equity investment activity in the enthusiast space illustrates this trend, such as J&P Cycles, acquired by Comoto Holdings (portfolio company of Prospect Hill Growth Partners) and Cortec Group’s investment in Enthusiast Auto Holdings, both completed this year.

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