US e-commerce price war may intensify in the future

After more than two years of the pandemic , the wildly growing e-commerce industry in the United States has gradually returned to normal levels. American retail giants including Amazon and Walmart are ready to face slower growth in online shopping and intensified price competition in 2023 .

Amazon has been cutting logistics and shipping expenses to offset weak e-commerce demand over the past year , while retail experts say Target and Walmart are also considering shifting more of their focus to physical stores .

According to statistics from the U.S. Census Bureau , in the second quarter of 2020, online retail sales accounted for more than 16% of total U.S. retail sales, but have since gradually declined to around 14.5%.

Econoday's economist Sheehan said holiday shopping may temporarily boost e-commerce sales , but they will fall next year .

“I think it’s entirely possible that online sales will reach 15% of total U.S. retail sales in the fourth quarter of 2022 , but then decline again in the first quarter of next year ,” Sheehan said.

In addition, high inflation will also weaken sellers' ability to raise prices, and more low prices and promotions may appear in the fourth quarter of this year and even in 2023 .

" It will be increasingly difficult for sellers to raise prices in the future because consumers are becoming more cautious and competition among sellers will become more intense , " said Arun Sundaram, senior equity analyst at CFRA.

According to 451 Research's "Voice of the Customer: 2022 Holiday Spending Outlook," 40% of respondents said they would spend roughly the same amount online during this holiday season compared to a year ago , 17% said they would spend slightly more online this year than last , and 14% said they would significantly increase their shopping budget this year .

Those who planned to spend less said inflation was the most important reason for their holiday spending to fall .

Amazon warned on Oct. 28 that its fourth -quarter holiday sales could be weak due to high inflation and low consumer confidence . Walmart and Target are also expected to warn of weak holiday demand .

Walmart and Target are expected to invest more in store remodels and offer more promotions to attract consumers while maintaining their respective positions in the e-commerce market , retail experts said.

In fact, Walmart's supply chain system is more mature than Amazon's , and it is expected that Walmart will continue to invest in its automation -related technologies. Target , the smallest of the three companies , may continue to focus on its DriveUp service, in-store pickup and delivery services.

USA

E-commerce