Online retail growth created 13,000+ jobs in NZ during pandemic-hit 2020: Deloitte

While the retail sector overall has had it tough during the pandemic, a report by Deloitte for Shopify says the e-tail software giant’s platform created 13,000 jobs in New Zealand during the pandemic and $3.4 billion in economic activity.

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Local contender Mobi2Go also reports huge growth (keep reading), while Retail NZ says the impact of the pandemic on bricks-and-mortar jobs was far less than originally anticipated – in part because of the stronger than anticipated rebound, and in part because the lines between traditional and digital retailing blurred during the pandemic-fuelled click-and-collect boom of 2020 (more from Retail NZ below).

Worldwide, Shopify – which holds roughly a third of the global market for setting up a store online – saw merchants using its software during 2020 process a collective US$307 billion, which means if they were one company it would have been the seventh-largest in the world.

In New Zealand, Shopify says there was a 56 per cent jump in new store creation during 2020.

The Canadian-based multinational says it finished the year with 17,000 NZ merchants on its platform.

Nearly $356m in exports were made by Shopify-supported Kiwi merchants, the Deloitte survey says.

The NYSE-listed Shopify itself reported an 86 per cent growth in revenue to US$2.9 billion for the 12 months to December 30, 2020, and a net profit of US$319.5m vs its year-ago net loss of US$124.8m.

Encouragingly for its investors, growth was still accelerating in the fourth quarter.

“From the start of Black Friday in New Zealand, through the end of Cyber Monday in California, sales on Shopify’s platform reached more than $5.1b. This compares with more than $2.9b in GMV for the global Black Friday Cyber Monday period in 2019,” Shopify said in February 21, 2021 NYSE filing.

Shopify underwrote some of its own growth, with cash advances and loans to merchants increasing 96 per cent during the fourth quarter to US$226.9m.

Local contender quadruples staff

A Kiwi competitor to Shopify says it also had a boom 2020.

The privately-held, Movac and Punakaiki Fund-backed Mobi20 piled on staff to 100 to cope with demand over 2020. It didn’t hurt that it had a $5m raise on the eve of the pandemic in its first major funding round.

CEO Tarik Mallett says: “We’re seeing gross order volume growth in excess of 200 per cent compared with the same time last year, which translated into the processing of more than 20,000-plus orders per day to our customers. In order to sustain our growth, we have more than quadrupled our headcount over the past year to more than 100.”

And although it began with a local focus, more than two-thirds of the Wellington startup’s customers are now offshore, Mallett says.

Small businesses have embraced online ordering during Covid, he says, as has been well documented, but the Mobi2Go boss has also spotted an interesting development at the bigger end of town.

“One of the more interesting trends we are seeing is enterprise brands taking a ‘pause’ over Covid to reflect on at their core, what they are best at as a business,” Mallett says.

Mobi2Go’s hero customers include Burger Fuel, Pita Pit and Tank. The company takes a 3 per cent commission on sales.

“Invariably running restaurants and building out a franchise business are their key strengths.Running an ‘IT shop’ and building their own digital ordering capabilities is not at their core so they are starting to outsource to best-of-breed providers such as Mobi2Go.”

The acceleration in adoption of digital ordering as well as changes in the way brands are thinking about internal build versus outsourcing has led to growth over the last 12 months of 250 per cent for Mobi2Go “with no slow down in sight,” Mallett says.

Bricks-and-mortar retailers digitise during 2020

On the bricks-and-mortar side of things, Retail NZ chief executive told the Herald there had been job losses. He did not have a specific number, but he described it as modest. “This time last year, we expected large job losses, but the economy has come back faster than we thought.”

Many bricks-and-mortar retailers had taken other cost-control measures, such as reducing staff hours from 40 hours to 30 hours, Hartford said.

The Retail NZ boss also stressed his organisation no longer differentiates between online and offline. “To be a competitive retailer in the 21st century, you’ve got to be omnichannel.”

Hartford said the lockdown surge in online sales and click-and-collect had seen a surge in bricks-and-mortar retailers digitising their business.

Pre-Covid, roughly half of NZ retailers had no online presence, Hartford estimated.

Today, he said that number is down to a quarter.

Hartford noted that the action was going both ways, with Amazon “retrofitting its business model” with its purchase of the Whole Foods supermarket chain and the opening of its own stores in the US.

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