Next round of stimulus checks could further boost ecommerce sales in the United States

Major players in e-commerce, including Inc., Walmart Inc. and Target Corp. are likely to benefit from a third party turn of dunning checks included in US President Joe Biden’s $ 1.9 trillion COVID-19 bailout bill, with the cash injection set to push already high digital retail sales up.

E-commerce sales in the United States in 2020 reached about $ 791.7 billion, or 14% of total retail sales that year, according to figures from the US Census Bureau. This represents an increase from 11% of total sales in 2019 and 9.7% in 2018.

Biden’s proposal includes relief checks of $ 1,400 for individuals. While income requirements and income limits are still being debated by Congress, past stimulus payments have corresponded to increased e-commerce sales. Camilla Ianouchevski, Senior Equity Research Analyst at CFRA Research, noted new round of checks would be larger than both approved in 2020, potentially causing consumers to splurge on discretionary items such as clothing, games and appliances.

Companies like Best Buy Co. Inc., including physical stores are expected to play a key role in the company’s e-commerce execution efforts, are likely to benefit from this increase as many elements of the the home economy is here to stay, Ianouchevski noted.

“We believe the Covid-19 winners have more room to run,” she said.

Seasonally adjusted e-commerce sales as a percentage of total U.S. retail sales reached 16.1% in the second quarter of 2020, from 11.8% in the first quarter, in part thanks to the first round of stimulus checks by ‘a value of $ 1,200 issued in March 2020 under the CARES law. This is also an increase from 10.7% in the second quarter of 2019 and 9.6% in the second quarter of 2018, according to figures from the US Census Bureau.

By the fourth quarter of 2020, e-commerce sales as percentage of total retail trade slowed to 14% but was still up from 11.3% in the fourth quarter of 2019. Retail sales rose sharply overall in January thanks in part to a A $ 900 billion pandemic relief bill passed in late December 2020 that included $ 600 stimulus checks to people earning up to $ 75,000. Yanushevsky said the bill’s late passage made January a more important month for gifts.

A third round of stimulus dollars will likely cause online sales to increase followed by moderation, but “the 14% range is what we’re going to continue to see in 2021,” Ysaid anushevsky.

While an additional round of stimulus checks will certainly boost e-commerce, the cash injection could lead to less increase in online spending overall as some consumers return to stores, said Nick Shields, senior analyst at Third Bridge who covers the retail industry.

Shields said consumers have already spent previous stimulus checks on more expensive items such as new cars and televisions, meaning the next round could be on items such as clothing, grills and household equipment. golf and fishing retailers such as Dick’s Sporting Goods.

“I thinks it’s fair to say you won’t see the bump like you saw in the last round and certainly not what we saw with the $ 1,200 checks that were issued last spring, ” Shields said.

As COVID-19 cases decline and vaccinations increase, consumers can use their stimulus dollars to go back to restaurants and travel again, said Katie Thomas, who heads the Kearney Consumer Institute, an internal think tank at management consulting firm Kearney.

“Maybe they’re ready to go out to eat, travel, buy a new Apple Watch,” Thomas said. “You start to see increases in clothes and beauty again as people are kind of excited to get dolled up and go out again.”