In 2020, the COVID-19 pandemic turned online selling and marketing on its head.
E-commerce sales, for example, skyrocketed, accelerating the shift to e-commerce by five years. Digital ad and revenue spending saw more oscillations, as the business world first halted ads in industries like travel and events, then saw record growth in Q3 2020.
Given last year’s boom, e-commerce merchants may have a few extra dollars in their pocket to spend on ads this year. But, understandably may have concerns given the uncertainties of the economy and increased digital ad competition.
To help our customers get smart about the markets they’re targeting for ad spend and the like, our Shippo team analyzed our aggregate package volume data in the Top 10 U.S. designated market areas (DMAs) across three time periods:
- COVID timeframe vs. all of 2019
- COVID timeframe vs. the same period in 2019
- COVID timeframe vs. the 2019 holiday season
Note: we pulled this data in early December 2020, and considered the COVID timeframe to be March 2, 2020 to Dec. 7, 2020 for this analysis. For an apples-to-apples comparison, we targeted Nov. 11, 2019 to Dec. 9, 2019 for the 2019 holiday season.
Here’s how the Top 10 DMAs fared last year.
The New York DMA – which includes New York City, as well as parts of Connecticut, Pennsylvania, and New Jersey – had the highest overall weekly package volume. This is likely, in part, attributable to the fact that it also has the largest population out of all DMAs measured.
The Los Angeles DMA – which includes Los Angeles, Riverside, Orange County, San Bernardino, and other nearby areas – came in a close second for package volume, but did so across a smaller total population.
Looking more closely, the San Francisco DMA – which includes San Jose and Oakland – came in third in terms of its overall increase in weekly package volume. It’s well behind New York and Los Angeles overall, but it still saw a staggering 111 percent increase during the COVID timeframe when compared to the same period in 2019.
The Impact of the COVID-19 Pandemic
When considering sales during the COVID-19 pandemic compared to the same period in 2019, the New York market saw the smallest volume increase among the top 10 DMAs. Although the area did experience a solid 80 percent increase in weekly package volume, all of the other markets considered in this analysis saw a minimum of a 102 percent increase, with Philadelphia and Boston eclipsing 130 percent growth.
So, while the New York DMA had the greatest number of weekly package orders overall, it’s notable that it also notched the smallest package volume increase during the pandemic.
Here’s a complete breakdown of how the COVID-19 pandemic impacted average weekly package volumes.
Package Volume Increases During COVID-19
|COVID timeframe vs. all of 2019||COVID timeframe vs. same period in 2019||COVID timeframe vs. 2019 Holiday season|
Weekly Package Volume Per Household
Another key metric we analyzed was the weekly package volume per household, based on Nielsen’s number of TV homes (get an overview of this metric here).
Here’s what we found:
In this assessment, growth in all of the Top 10 DMAs is up, yet the Los Angeles DMA received 22 percent more packages per TV household than the New York DMA. The San Francisco market ranked second, receiving 18 percent more packages per TV household than New York.
YoY Weekly Package Volume Growth
The final piece of the puzzle is year-over-year (YoY) weekly package volume growth. When growth from March-December 2019 is compared to the same period in 2020 as a percentage of market population, the Los Angeles DMA comes out ahead, with San Francisco ranking as a close second.
The New York DMA comes in third – then, there’s a drop among the remaining Top 10 markets, with Philadelphia, Dallas, D.C., Boston, and Atlanta seeing similar increases, and Houston and Chicago racking up the lowest YoY volume growth.
Given these trends, it’s clear – and perhaps not unexpected – that COVID has driven a major increase in the number of e-commerce orders being placed in major metropolitan areas. While consumers were already turning to online channels more frequently before the pandemic, COVID has essentially poured gasoline on the fire.
In addition, differences between DMA growth patterns may influence how some sellers conduct operations in these major markets. Take the New York DMA, for example. It receives a higher weekly package volume than any other of the Top 10 DMAs by a wide margin – likely due to the sheer size of the area.
Given the massive reach, New York is likely a good option for e-commerce businesses to target with location-based marketing (also known as geo-targeting).
However, the San Francisco and Los Angeles markets may be the hidden gem in our findings, since each household is buying more items than their New York counterparts. That means that you can target less people with ads, but may get more bang for your buck since urban Californians are buying more stuff.
While every seller’s situation is different, it’s worth considering whether the growth seen in the Los Angeles and San Francisco DMAs should influence investments into marketing and advertising campaigns in the state. Sourcing production, warehousing, shipping, and other operational resources in the state may also represent cost-savings for sellers who have sent abnormally high package volumes into the state.
It remains to be seen to what degree e-commerce sellers will experience similar increases as we head into COVID’s second year. But by paying attention to data like this – as well as taking advantage of savings opportunities through partners like Shippo – e-commerce sellers can position themselves for success in the coming year, no matter what it brings.