New data underscores a slowing e-commerce market

Back in 2020, Ashwin Ramasamy, a founder at PipeCandy, asked on TechCrunch if the “e-commerce shift” the world was seeing as COVID-19 shook up the global economy would last. The answer was yes. But that doesn’t mean that the same pace of online commerce growth that the world saw during the pandemic will be maintained.

Indeed, as 2021 came to a close, data began to indicate that the e-commerce boom was slowing. The question at that juncture was whether we were seeing a reversion to growth norms from the pre-COVID era or if growth would slow even more; in the latter case, it would imply that future e-commerce activity was pulled forward, instead of the larger digital commerce pie growing thanks to long-term changes to the economy.


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New data from Pinduoduo, a huge Chinese e-commerce company, and trailing results from Alibaba and others from the fourth quarter of last year hint that the pull-forward model of recent e-commerce growth is the most likely.

For startups, it’s somewhat mixed news. Certainly, any startup selling into the e-commerce market has more TAM than ever to, well, address.

But slowing growth means that it will be harder to grow at prior levels, as outperforming the market segment enough to wow venture capitalists will become more difficult. (But certainly not impossible, as today’s nine-figure CommerceIQ round makes clear.)

Let’s parse some of the most recent data to get a handle on where we are today.

Pinduoduo’s slowing growth

In the fourth quarter of 2021, the Chinese e-commerce giant grew just 3% from its year-ago results, posted during the pandemic-accelerated Q4 2020 period. More simply: Pinduoduo barely managed to not shrink compared to its late-2020 results.

In numerical terms, Pinduoduo reported $4.3 billion in revenue. That figure in its local currency was RMB27.2 billion, under market expectations of RMB30.1 billion. Investors had expected a lot more growth than what Pinduoduo was able to deliver, but profits of more than $1 billion helped assuage the market.

Pinduoduo is not that much an outlier.

If we drill into Amazon’s Q4 2021 results, we see that the company’s international e-commerce business shrank from the year-ago period ($37.3 billion compared to $37.5 billion), while its North American online sales were up a stronger 9.3% to $82.4 billion from $75.3 billion in Q4 2020. Summed, Amazon’s e-commerce sales rose just 6% from Q4 2020 to the company’s most recent quarter.

There are other recent examples. Alibaba’s total revenues grew 10% in the fourth quarter of 2021, while its Chinese e-commerce business grew just 7%. The Chinese e-commerce and cloud computing giant did have a better growth quarter in its international digital commerce markets, but as that total revenue segment is worth less than 7% of the company’s total revenues, the data point doesn’t change the narrative much.

What about Shopify? It’s an e-commerce company as well. Here’s how BetaKit described its Q4 results:

The Ottawa-based company released its Q4 2021 earnings this morning, revealing slowing revenue growth, decelerating Black Friday sales, and soft revenue guidance, as the COVID-19 pandemic, government lockdowns, and stimulus tailwinds that drove the rise of e-commerce begin to subside.

Woof. Not good.

We’re seeing growth decelerations from many companies as the pandemic ebbs. This was anticipated. But not every sector where growth soared was expected to return fully to Earth. Why? So-called secular shifts in the economy. And we are seeing that, as e-commerce companies are at least hanging onto prior growth gains. But with growth decelerating down to an idle for many e-commerce giants, it’s hard to decide what measure of recent performance is due to the market digesting a secular transformation to a more digital commerce posture and what is a hangover from growth being pulled forward, instead of generated whole-cloth.

The result of the e-commerce slowdown is the rapid devaluation of companies that had ridden high during COVID. Coupang, for example, has seen its value fall from $50.50 per share when it went public a year ago to $18.68 per share today. For companies that looked to Coupang as a comp and a north star in the wake of its IPO, that’s awful news.

Perhaps you saw this coming, or at least part of it. But investors priced the above companies like their growth would continue at prior levels, leading to some material price declines when it didn’t.