Nearly Half of Americans Are Making More Online Purchases Amid Pandemic

Though the number of online shoppers in the U.S. has consistently risen since at least 2016, the coronavirus crisis seems to have supercharged this increase. In fact, nearly half of Americans reported in mid-to-late September that they made more online purchases than usual over the prior seven days.

But the trend isn’t evenly distributed across states, according to LendingTree’s analysis of the latest data from the Census Bureau Household Pulse Survey. This has profound implications for local economies, especially as the pandemic continues. Here’s what else we found.

Key findings

• California (56.5%), Washington (55.3%) and Massachusetts (54.7%) residents reported making more online purchases than usual over the prior seven days — highest in the survey.
• Rural states tended to have the lowest percentage of residents who said they made more online purchases than usual. Wyoming, Mississippi and Louisiana all were below 40% — lowest in the survey.
• The online shopping rise can be seen across generations, as 43.3% of Americans 65 and older cited an online shopping increase over the seven-day period. That is lower than other cohorts — 54.3% of Americans ages 25 to 34 reported an increase, which was the highest — but still significant.
• The ability to make more online purchases tracked with income over this period. While only 35.3% of people with an income of less than $25,000 reported an increase in online shopping, 65.5% of Amercans who earned at least $200,000 reported the same.

Where Americans are making more online purchases

The percentage of residents who said they made more online purchases over the seven-day period ranged from 52.1% to 56.5% among the top 10 states on our list.

The Northeast led the top 10 with five states: Massachusetts, New Jersey, Rhode Island, New Hampshire and Connecticut. Two Western states (California and Washington) and two Southern states (Virginia and Delaware), along with the District of Columbia, also made the top 10.

COVID-19 restrictions for nonessential retailers vary across our top 10. For example, California follows a tier-based structure in which retail capacity may be capped as low as 25%. In Massachusetts and the District of Columbia, which ranked third and fourth on this list, respectively, retailers can only have a maximum occupancy of 50%. These restrictions can make online shopping more relevant in these states.

Where Americans are making fewer online purchases

The South dominated here, with six states in the bottom 10: Mississippi, Louisiana, Arkansas, Oklahoma, Tennessee and Alabama. The West — Wyoming, New Mexico and Montana — and  Midwest — South Dakota — were represented as well.

In South Dakota, which landed in the bottom five, the state’s governor didn’t shut down businesses when COVID-19 hit — and still hasn’t. The fact that retailers never had to close could contribute to fewer South Dakotans turning to online purchasing more. Interestingly, Alabama — which landed in the bottom 10 — is limiting in-store shopping occupancy to 50%. That level of restriction is comparable to the upper capacity limit for California, which finished at the top of our list.

A closer look by age, race, education and household income

• Age: Younger folks were slightly more likely to make more online purchases in the period covered by the Census Bureau survey, with slight drop-offs for those 40 or older.
• Race: Asian and white Americans increased their online spending the most during this period, with more than 50% reporting having done so. Black Americans, on the other hand, increased online spending by 43.9%.
• Education: Online spending increases strictly followed educational levels, with a higher rate correlating to more education. About 29% of respondents without a high school degree said they made more online purchases in the seven-day period, while about 61% with a bachelor’s degree or higher reported the same.
• Household income: Similarly to education, there was a correlation between income and online spending habits. Groups with earners of $75,000 or more a year all had at least 50% of respondents report they made more online purchases.

Online shopping habits when going into debt to make ends meet

Online shopping can be a necessity in more ways than one, particularly during a pandemic. Whether that’s purchasing formula for your child or getting necessary medicine from an online pharmacist, online shopping isn’t always frivolous.

In fact, 57.7% of Americans who used credit cards or loans over the prior seven days to meet spending needs said they made more purchases online during this period, while 43.5% of Americans who borrowed from friends or family said the same.

“Unfortunately, millions of Americans use credit cards as an emergency fund because they don’t have enough money saved away for when financial trouble hits,” said Matt Schulz, LendingTree’s chief credit analyst. “Most Americans’ financial margin for error is pretty darn small. Government stimulus and reduced spending during COVID-19 might’ve changed that a bit in recent months, but it is still mostly true.”

For many, credit cards can provide a financial safety net for everyday purchases because:

• The full balance doesn’t have to be paid back immediately
• They allow for more convenient — and physically distant — spending
• A credit limit may be higher than a loan from a friend or family member

Still, it’s important to reassess spending habits to minimize debt, whether you’re adding to your credit card balance or taking out a personal loan.

How to shop safely online amid the coronavirus crisis

• Look into delivery safety standards: Many delivery services are now offering leave-it-at-the-door options to cut down on contact between personnel and customers. But that isn’t available everywhere, and it may pose a theft risk for some. If you have to order from a new site, check out the delivery options and see how the company is addressing safety.
• Beware of scams: The pandemic has also become a source for problems like sham charities and face mask orders that never materialize. While online shopping is generally safe, it’s still important to be aware of any potential red flags, like an odd URL or spelling errors. Always search the name of a new site, including words like “fraud” or “scam,” before giving them your billing information.
• Use a credit card rather than a debit card: If you purchase from an unfamiliar site, a credit card is going to be a better option, according to Schulz. “That way, if something does go wrong, you won’t be out any real money from a checking account,” he noted. “You’ll simply have to call your credit card issuer and have the charges removed.”

“Ultimately, it’s about trusting your gut,” said Schulz. “Remember that there are countless shopping sites out there. In most cases, that item that you’re dying to have is probably also available on some other website. So don’t be pressured into using a site that you don’t trust.”

Methodology

LendingTree researchers analyzed Census Bureau Household Purse Survey data collected from Sept. 16 to 28, 2020, to find where Americans were making more online purchases than usual over the prior seven days.