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The recent global pandemic caused multiple businesses to transform operations and standard operating procedures to support the “new normal.” The “new normal” includes participants familiar with a world of platforms supporting actions and behaviors that help maintain existing norms.

While Zoom Video Communications Inc (NASDAQ: ZM) has transformed from a noun to a verb; a litany of companies, for example, Zillow Group Inc C (NASDAQ: Z), Etsy Inc (NASDAQ: ETSY), Overstock.com Inc (NASDAQ: OSTK), Draftkings Inc (NASDAQ: DKNG), Grubhub, Inc (NYSE: GRUB) and Wayfair Inc Class A (NYSE: W) received recognition for enabling ecosystems to continue when overlapped with strict social restrictions. It’s not just about taking existing systems and transforming them to fit the digital future but making them accessible enough that onboarding becomes easy to manage. By making onboarding as easy as possible, the user can immerse themselves into the ecosystem quicker and reap its benefits.

Since World War II, the American consumer has offered multiple ways to view the relationship of supply and demand. According to PBS American Experience, between 1945 and 1949, the American consumer had purchased 5.5 million stoves, 20 million refrigerators, 21.4 million cars, with the 1950s being the year of televisions and automobiles [1]. As technology transitioned, consumerism transitioned. The 1990s was the year of the computer with the Bureau of Labor Statistics reporting that “Between 1990 and 1997, the percentage of households owning computers increased from 15 percent to 35 percent. During this time, the amount spent by the average household on computers and associated hardware more than tripled” [2]. A computer allowed for the creation of new ecosystems enabling the current environment of the 21st century. 

In January 2020, Jeff Bezos, Amazon founder, and CEO announced that “we now have over 150 million paid Prime members around the world” [3]. One year later, the pandemic has only strengthened its market position, increasing net sales year over year by approximately $100 billion or 38% [4]. Many historical markers have enabled Amazon’s acceptance into the mainstream, with the most significant being convenience. Powered with a rechargeable personal computer the size of an index card weighing down one’s pants, the narrative on buying and spending has changed from store clerks to chatbots and youtube reviews. All it takes now is a simple tap or swipe of a virtual button on a screen to deliver a product to your doorstep within days. 

To be clear, included in Amazon’s numbers is not simply the sales from the website Amazon.com, but Amazon Web Services and its other business. E-commerce as a genre has attracted mass adoption for its convenience and accessibility. In November 2020, Celine Pannuti, Head of European Staples and Beverages Research at J.P. Morgan, shared, “We see retailers narrowing their product range, focusing on what matters more and mainstream brands and products, so the shift to e-commerce for big and small brands is key” [5]. Many retailers are forced to accelerate their digital efforts to sustain the status quo to maintain relevancy. In a year of social distancing, maintaining relevance was necessary so that when things went back, related activities would resume accordingly. 

Creating e-commerce systems for large brick and mortar retailers looks a little different than small retailers. For many small to medium size retailers, the task was to come online, whereas, for the larger retailers, it was to continue the status quo. By juxtaposing Point of Sale (POS) systems providers of SMBs and large businesses, a dynamic can be highlighted. For the fiscal year, 2020 compared to 2019, online small and medium-sized merchant systems provider Shopify Inc A (NYSE: SHOP) reported a 116% growth in merchant solutions revenue [6], whereas Square Inc A (NYSE: SQ) reported a 49% growth in subscription and services-based revenue [7]. NCR Corp (NYSE: NCR), a provider of POS systems to large retailers such as Walmart and Target, reported a decline of 7% in retail revenuedue to a decrease in self-checkout and point of sale revenue” [8]. 

The pandemic forced small and medium businesses to either change or adopt new systems to manage operations. Large companies had to pivot existing technologies to speak with new technologies, the cloud, to create an omnichannel network that would support sales. Many small businesses were forced to come online to stay in business to support operations.

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Consider the percent change from a year ago E-Commerce Retail Sales as a Percent of Total Sales data provided by the U.S. Census Bureau.

Between Q4 2009 and Q1 2019, the line is relatively stable, with not much volatility to speak of. Q2 2020 changed the narrative with an incredible incline. As time progressed and lockdown measures eased, a decline can be noticed.



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Image from Fred Economic Data, Federal Reserve of St. Louis. Click on the image to learn more.

Comparing the Percent Change of the Year-Ago chart of E-Commerce Retail Sales as a percentage of Total Sales compared to Total Business Sales highlights an exciting dynamic for 2020.

In Q2 2020, as Total Business Sales declined compared to Q2 2019, E-Commerce played a critical role in supporting a vital economic infrastructure – consumerism.

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Consider, Percent Change from the Year-Ago chart of the Personal Consumer Expenditure data for Services, Durable goods, and Non-durable goods provided by the U.S. Bureau of Economic Analysis.

Durable goods are defined as goods that can be used repeatedly and last longer when compared to Non-durable goods. Between Q2 2012 and Q4 2019, consumers spent more on Services and Durable goods when compared to Non-durable goods. An exciting highlight for 2020 is durable goods’ dominance when compared to non-durable goods since the lack of services had altered many American wallets’ trajectory.



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Image from Fred Economic Data, Federal Reserve of St. Louis. Click on the image to learn more.

The personal savings rate calculated by the U.S. Bureau of Economic Analysis is at a historical high, with it being at its highest in Q2 2020.

Even though the pandemic curtailed spending due to lockdown closures, personal savings are compared to previous charts; can help visualize just how much e-commerce played a critical role. In the 21st century, the option of purchasing durable goods from the internet is remarkable. The American consumer is a powerful agent with significant spending potential. Vigorously tested, the American consumer pivots at times to support the consumption-driven economy of America.

Popular commentary supports the argument that e-commerce would replace existing infrastructure since the pandemic has changed consumer behavior entirely. Mark E. Bouton from the University of Vermont provides various case studies in his research, Why Behavior is Difficult to Change. According to Professor Bouton,  “Learning something new about a stimulus does not necessarily erase the earlier learning. It involves inhibition that is sensitive to context change” [9]. The pandemic translated previous inhibitions of buying and selling to a new domain, the internet, in the context of social distancing measures. To correlate the turbulence with the elimination of previous systems would be too soon to call. 

It would be apt to think that e-commerce would share linkages with the pre-pandemic infrastructure instead of entirely outdating it. Moreover, the American consumer spends more on services than goods, so conflating widespread e-commerce practices to change in spending behavior would be short-sighted. The pandemic presented a unique perspective in which social distancing measures allowed for e-commerce to flourish. 

E-commerce is a big part of modern society for its convenience and feasibility. Moreover, establishments that offer omnichannel options, such as order online and pick up in-store, still require a Point of Sale (POS) system to validate the customer transaction. Companies such as NCR, Square, Shopify, Fiserv Inc (NASDAQ: FISV) hold a unique place in basic market processes. Companies small, medium, or large all require a POS system to document sales, because at the end of the day, a business is in business to generate sales.

Author’s Note- The data shared in the essay is reflective of the results rendered till the date of publication. As of publication, I own shares of NCR Corp (entry – Jun 2020). Historical performance only serves as an indicator and teacher, not a predictor. The thoughts expressed are my personal opinions, and cannot be equated to personal advice. The essay was constructed for informational and educational purposes only. I encourage all readers to perform their own due diligence prior to investing.