The pandemic was the greatest forced adoption event in e-commerce history. Businesses that had been "thinking about online" for years launched digital storefronts in weeks. Consumers who'd never bought groceries online became regular users. Two years later, the numbers are normalising, and the businesses that treated the surge as the new normal are feeling the correction.
What You Need to Know
- E-commerce penetration surged in 2020-2021 but is now reverting toward the pre-pandemic growth trendline, not the pandemic peak
- NZ businesses that invested in sustainable digital commerce infrastructure are outperforming those that scaled for the peak
- The winners are hybrid models: digital discovery, flexible fulfilment, physical experiences that digital can't replicate
- Customer acquisition costs online have increased significantly as more businesses compete for the same digital attention
The Correction
In 2020, NZ e-commerce grew by roughly 25% year-on-year. In 2021, growth continued but at a decelerating rate. In 2022, we're seeing something closer to the long-term trendline: steady growth in the 8-12% range, not the exponential curve that some businesses planned for.
12.3%
projected NZ e-commerce growth for 2022, down from 25%+ during the pandemic peak
Source: NZ Post E-Commerce Spotlight, 2022
This isn't a failure. This is normalisation. The pandemic pulled forward several years of adoption into a few months. Now we're back on the long-term curve, just starting from a higher baseline.
The problem is that some businesses built their infrastructure, hired their teams, and set their revenue targets based on the peak, not the trendline. They're now dealing with excess capacity and unmet growth expectations.
What Sustainable Looks Like
We've been doing e-commerce work for years, including a project with a well-known NZ retailer that combined physical and digital commerce in ways that neither channel could do alone. The lesson from that work, and from watching the market since, is that sustainable digital commerce looks nothing like the pandemic version.
Discovery is digital, fulfilment is flexible
Most customers start online even when they buy in-store. The digital presence isn't primarily a sales channel. It's a discovery channel. Product information, availability, reviews, comparisons. The purchase might happen online, in-store, or through click-and-collect.
Businesses that invested in the discovery experience, good search, detailed product information, honest reviews, are performing better than those that invested purely in the transaction. The transaction is the easy part.
The physical experience still matters
One of the most interesting things we've seen post-pandemic is the return to physical retail for categories where the experience matters. Music, books, specialty food, fashion. Customers want to browse, to discover things they weren't looking for, to talk to someone who knows the product.
The best retail experiences we've seen in 2022 aren't purely digital or purely physical. They're combinations where digital handles the boring parts (stock checks, reordering, price comparison) and physical handles the interesting parts (discovery, expertise, community).
Isaac Rolfe
Managing Director
The NZ retailers that are thriving are the ones that figured out what their physical presence offers that digital can't replicate, and leaned into it.
Customer acquisition is expensive now
Here's the number that changed most dramatically. In 2020, digital customer acquisition was relatively cheap because consumer attention was captive. People were at home, browsing. In 2022, every business is competing for the same digital attention. Facebook ad costs are up. Google CPC is up. Email open rates are down.
47%
increase in average cost-per-click for NZ retail Google Ads between 2020 and 2022
Source: Google Ads Benchmark Report, WordStream, 2022
For businesses that relied on cheap digital acquisition to make their e-commerce economics work, this is a problem. The revenue per customer hasn't changed, but the cost to get them has.
The NZ Context
New Zealand's e-commerce market has specific characteristics that differ from larger markets. Our population is small and concentrated. Logistics costs are high relative to order values. Same-day delivery is available in Auckland and Wellington but impractical for much of the country.
These constraints mean that the "Amazon model" of infinite selection and rapid delivery doesn't translate directly to NZ. What works here is curated selection, reasonable delivery expectations, and strong brand relationships. NZ consumers are more loyal to brands they trust than consumers in larger, more competitive markets.
What to Focus On
If you're running e-commerce in NZ in 2022, the priorities have shifted from "grow fast" to "grow sustainably."
Invest in retention over acquisition. It's cheaper to sell to existing customers than to find new ones, and the gap is widening. Email, loyalty programmes, and genuine customer service are less exciting than Facebook campaigns but more profitable.
Get the basics right. Site speed, product information quality, search functionality, mobile experience. These aren't innovative. They're foundational. And they're still substandard on most NZ e-commerce sites.
Integrate your channels. Inventory visibility across online and physical. Consistent pricing. Easy returns regardless of purchase channel. This is the integration work that nobody finds exciting but everybody needs.
The pandemic bump was a one-time event. What comes next is a longer, steadier game that rewards fundamentals over growth hacking.