Over the past five years, ecommerce has grown at a pace at least twice as fast as total retail sales and that trend will continue over the next five years, according to published reports. In 2012, ecommerce had a healthy 14.8 percent growth rate over 2011, easily eclipsing the total retail sales growth rate of 5.3 percent. By 2017, the Internet will account for ten percent of all U.S. retail sales when online sales will reach $370 billion, up from $231 billion this year, according to Forrester Research. Growth is coming mainly from existing customers, who are spending more money online, rather than from new shoppers.
What’s Driving Growth?
Brick and mortar retailers are getting better at multi-channel offerings. In-store pickup and store returns for items purchased online are examples of how these merchants are accommodating customer wishes. Those with good online execution are seeing their online growth outpace their store sales growth.
For online-only merchants, publishing customer reviews and presenting 360-degree product views make shoppers feel more comfortable about buying online. Personalization helps to increase sales to existing customers.
Tablets Rule M-commerce
The increased penetration of web-enabled smartphones and tablets increases the amount of time consumers spend online. While the rapid growth in purchases from mobile devices has caught both analysts and some merchants off guard, it’s clear that customers feel comfortable buying via mobile devices, especially tablets, which provide better visual experiences. Twenty percent of visits to leading ecommerce websites originate on mobile devices according to Monetate, a provider of personalization technology.
Research firm eMarketer reports that this year, 62.5 percent of all mobile commerce will come from tablets, despite the fact that they have a lower penetration rate than smartphones. That figure will rise to 71.5 percent in 2017. Mobile users’ share of U.S. retail ecommerce sales will rise from 15 percent in 2013 to 25 percent in 2017. And people purchasing via mobile devices tend to make higher average orders.
Ecommerce sales are booming in Asia-Pacific with China, India, and Indonesia setting the pace, according to eMarketer. Business-to-consumer sales will grow more than 30 percent this year and China will replace Japan as the region’s largest ecommerce market. In 2012, online retail sales in China totaled $179 billion, up 42.2 percent from $126 billion in the previous year, according to the China Ministry of Commerce. Forrester Research estimated Chinese ecommerce sales even higher, at $219 billion. The largest ecommerce company in the world — Alibaba — is based in China. The privately held company facilitated $173 billion in sales in 2012. That’s more than eBay and Amazon combined.
Total Asia-Pacific direct-to-consumer ecommerce sales totaled $378 billion in 2012. Amazon alone had $8.8 billion in sales in Asia in 2012. This year Asia-Pacific is expected to overtake North America as the region with the most business-to-consumer ecommerce sales.
In the U.S., computer and consumer electronics is the category with the most online sales, with expected 2013 revenues of $56.8 billion, according to eMarketer. However, by 2016, apparel and fashion accessories will catch up, with each pulling in about $88 billion. Between 2012 and 2017, apparel and fashion accessories along with food and beverage will have the highest compound growth rates, at 17.2 percent and 17.0 percent respectively. What’s driving growth in the apparel sector? Social media opinion sharing and better visuals such as body scanning technology, online runway videos, and 360-degree product views.
Trends that Have Cooled
Daily deals from companies such as Groupon and Living Social have lost their luster. Celebrity curation has also waned. Shoppers seem to trust recommendations from family and friends more than those from paid celebrities.
Subscription ecommerce is still raking in venture capital investments but there is a belief that consumers may be tiring of this business model as well and some online merchants have abandoned it.
Takeaway for Ecommerce Merchants
Most people who feel comfortable purchasing online are already doing so and Forrester Research predicts only 4 million new ecommerce customers this year. Therefore merchants should focus marketing efforts on retaining existing customers rather than trying to lure new customers. Implementing loyalty programs is a good way to minimize customer churn.
Making sure that the customer has a good mobile shopping experience is more important than ever. Merchants should consider responsive web design, a technique that renders content in a visually pleasing, usable format on any device. We addressed that topic in “Getting Started with Responsive Web Design.”