{"id":32207,"date":"2021-07-09T15:25:19","date_gmt":"2021-07-09T21:25:19","guid":{"rendered":"https:\/\/www.vendasta.com\/blog\/?p=32207"},"modified":"2026-01-12T10:45:37","modified_gmt":"2026-01-12T10:45:37","slug":"amaras-law-ecommerce","status":"publish","type":"post","link":"https:\/\/www.vendasta.com\/blog\/amaras-law-ecommerce\/","title":{"rendered":"What is Amara\u2019s Law and How is it Relevant to Ecommerce"},"content":{"rendered":"

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\u201cWe tend to overestimate the effect of technology in the short run, and underestimate the effect in the long run.\u201d \u2013<\/i><\/b> Amara\u2019s Law<\/b>.<\/i><\/b><\/p>\n

Roy Amara was an American researcher, scientist, futurist, and president of the Institute for the Future. While it is not exactly known when and where he made this statement, the belief is\u00a0it may have been sometime in the 1960s or 1970s.\u00a0<\/span>For years, it has been a theory used to<\/span> forecast\u00a0 the effects of a technology, including more recent artificial intelligence\u00a0and blockchain.\u00a0<\/span><\/p>\n

\u201cAmara\u2019s Law has to do with how people think about the future, and the belief that the impact of technology increases at a consistent, linear rate over time,\u201d says Vendasta CEO Brendan King.\u00a0 He was speaking at the company\u2019s <\/span>Conquer Local Connect<\/span><\/a> virtual event in June.<\/span><\/p>\n

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\u201cThe reality is most technology-driven productivity starts slow, often being overestimated in the early stages. Many technologies are currently in this phase from artificial intelligence, nanotechnology to quantum computing <\/span>\u2013 they are in early stages of development and their impact is being overestimated in the very short term. However, over time as technology evolves, people tend to underestimate the impact and overall importance, particularly in the long term,\u201d he adds.\u00a0\u00a0<\/span><\/p>\n

This is what happened with ecommerce. <\/span>For the past 10 years, it grew at a steady but tepid pace. Then COVID-19 happened in 2020, leading to a sudden explosion in growth for ecommerce.\u00a0<\/span><\/p>\n

\"Amara's<\/a><\/p>\n

In the United States, <\/span>ecommerce grew 32 percent<\/span><\/a> in 2020 to reach $790 billion \u2013 that\u2019s up from $598 billion in 2019. Ecommerce represented 14 percent of total retail spending in 2020, as compared to 11.3 percent in 2019, <\/span>according to data from the US Department of Commerce.<\/span><\/p>\n

Even outside the United States, <\/span>ecommerce growth in 2020 rapidly climbed. <\/span>Latin America<\/span><\/a>\u00a0<\/span>stood out with 36.7 percent growth, despite suffering worse-than-average declines in overall retail sales (3.4 percent drop),<\/span> followed by North America, Central & Eastern Europe, and Asia-Pacific.\u00a0<\/span><\/p>\n

\u201cThe rise of ecommerce has been rather slow and steady for well over a decade, but in 2020 COVID triggered a step function increase in demand as consumers and businesses were literally forced online,\u201d says King.\u00a0<\/span><\/p>\n

\u201cWe have all made shifts in our buying habits to accommodate restrictions, lockdowns, and store closures. I am sure many of you now have your credit card and CVV number memorized.<\/span><\/p>\n

\u201cAnd many businesses are already adopting the technology and taking advantage of the opportunity.\u00a0 In fact, ecommerce penetration rates grew more in 2020 than during the previous 10 years.\u00a0All in a matter of a few months!\u201d he adds.<\/span><\/p>\n

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Ecommerce Is Here to Stay<\/h2>\n

As\u00a0more people get COVID vaccinated and the worst of the pandemic seems to be over, some are marking the assumption that in-person purchasing habits will fully return, and that demand for ecommerce solutions will drop and normalize.\u00a0\u00a0<\/span><\/p>\n

But such an assumption may be far from fact. The pandemic appears to have forever altered the retail landscape. A <\/span>Salesforce survey<\/span><\/a> finds 61 percent of consumers saying they will do even more online shopping after the pandemic than they did before.<\/span><\/p>\n

\"Amara's<\/a>

Source: State of the Connected Customer; Salesforce<\/p><\/div>\n

Even the <\/span>United Nations Conference on Trade and Development (UNCTAD)<\/span><\/a> notes that it\u2019s likely the accelerated trend towards ecommerce seen during the pandemic will be sustained during economic recovery.\u00a0<\/span><\/p>\n

As we saw in China with Alibaba\u2019s rise, once consumers realize the convenience of a technology, they tend to stay loyal. There are other examples, too. China\u2019s JD Multimedia (now JD.com) migrated its offline business to online during the same SARS pandemic to emerge as one of the largest retailers in China.\u00a0Similarly, other lesser-known Chinese ecommerce companies jumped online to do business successfully.<\/span><\/p>\n

\"Alibaba<\/a><\/p>\n

Likewise, this time it holds true for the retail industry across the world.\u00a0<\/span><\/p>\n

As King points out, 43 percent of consumers in the United States have already determined that they will not return to their previous in-store shopping habits.<\/span><\/p>\n

It\u2019s not much different in other geographies. \u201cThe truth is many consumers have become comfortable buying online.\u00a0For some,\u00a0it might be a new sense of trust and security, and for others convenience,\u201d he says.<\/span><\/p>\n

Learn How to Sell Online in 2021: 10 Tips for Small Businesses Getting Started with Ecommerce<\/strong><\/a><\/p>\n

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Back to Amara\u2019s Law and Ecommerce<\/b><\/h2>\n

Going back to Amara’s Law, which suggests that the uptake of innovative technologies is likely to be slower than initial expectations. This is because, despite the hype around a technology, usage inertia and loyalty to traditional platforms usually remain the biggest hindrances to adoption. It was the same with ecommerce \u2013 for both end-consumers as well as ecommerce players, particularly small businesses.\u00a0<\/span><\/p>\n

COVID-19 was an inflection point for the acceleration of digital transformation and ecommerce adoption for small and medium businesses (SMB) who were hitherto resisting technology adoption. The stay-at-home regulations in the beginning and the strict physical distancing later left businesses \u2013 many of them small, local ventures who completely relied on in-store traffic \u2013 with no choice but to move online.<\/span><\/p>\n

The shift towards ecommerce was largely varied:<\/span><\/p>\n