New Stimulus Checks Could Boost Online Spending

The new economic stimulus bill is expected to drive online spending. A new post from S&P Global Market Intelligence anticipates the third round of stimulus checks, which will distribute to $1,400 to individuals making $75,000 annually or couples earning $150,000 annually, will benefit e-commerce giants like Amazon, Walmart and Target.

Earlier stimulus checks have contributed to increased online spending, particularly for discretionary goods like wearables, gaming and appliances. The $1,400 stimulus check is larger than the previous two rounds of $600 and $1,200, providing a good case for further increases in online spending.

Overall, the e-commerce industry benefitted tremendously during the pandemic. Last year, online shopping sales hit $791.7 billion or 14% of total retail sales. It was a significant increase from 11% of total sales in 2019 and 9.7% in 2018. “We think that Covid-19 winners have more room to run,” Camilla Yanushevsky, senior equity research analyst with CFRA Research, said in the post.

Following the $900 million stimulus package passed in December, online retail sales grew “sharply” in January, according to the post. Many consumers spent the stimulus money on big-ticket items like cars and TVs. As a result, this next round will likely go to smaller items like apparel, grills, and golf and fishing equipment. A retailer like Dick’s Sporting Goods is among the retailers that could benefit significantly. Increased vaccinations could also help to fuel spending in restaurants and travel-related expenditures.

Online retail sales had been projected to decrease this year. Last year, much of retail spending shifted online as a necessity, but once physical retail stores reopen and it is safe to shop, online retail spending will likely moderate. At the end of last year, a report from Colliers predicted that online retail sales will decrease 8.5% in 2021, while in-store retail sales will increase 5.9%.

But while online shopping is projected to fall this year, the report also expects it to resume its upward climb in 2022 and beyond. By 2023, online retail spending will likely hit 18.3%, growing to 19.9% by 2025. Like the post from S&P Global, the Colliers report also predicts increased spending in discretionary items, like apparel, jewelry and beauty.