The internet is a place where many wonderful things can happen. One of the best is that the average person with a computer can shop for things they need from home, purchase them, and then have them shipped directly to their front door. Internet retail sales have been climbing every year since 2005, including the recession year of 2008, and that trends doesn’t look to be stopping any time soon.
By 2017, it is estimated that online retail sales will grow to $434.2 billion per year in the United States.
Thanks to the available of mobile devices, internet retail sales are more accessible than ever before. More products are available on ecommerce platforms than ever before. What does this mean for the average consumer? More variety, more accessibility, and better information so that informed decisions can be made.
Three Fast Facts About Internet Retail Sales
1 Online apparel sales are expected to reach $73 billion in 2016, a 16.4% increase per year.
2. Q1 2014 retail sales on the internet were estimated to be 15% higher from the same period in the last year.
3. Worldwide internet retail sales in 2013 were estimated to be $1.1 trillion.
Takeaway: When prices are better online and consumers are given the ability to instantly research the quality of a product, there is more value in an ecommerce experience any more when compared to a traditional retail outlet. Some industries, such as clothing, will continue to have a strong physical store presence, but free returns on items that don’t fit right from online retailers can counter that trend in this specific industry. With trillions spent online every year and growth approaching 7% of the total amount of retail worldwide in 2013, what is amazing is that getting involved in internet retail sales is still a potential ground floor opportunity.
How Much Growth Is There?
1. Global ecommerce trends show a steady pattern of 19% growth year-to-year since 2010.
2. The number of digital shoppers in the United States was over 191 million in 2013.
3. Amazon.com is the leading internet sales retailer, having $67.86 billion in sales in 2013.
4. Mobile retail commerce revenue in the US was $12 billion in 2013 with almost 80 million buyers using a mobile device to purchase items.
5. UK retail internet sales saw a 6.1% increase in activities when compared to the year before.
6. Current estimates place 40% of worldwide internet users have purchased at least one item online in the past 12 months, which equates to over 1 billion buyers.
7. The Asia-Pacific region is responsible for the most online purchases worldwide, encompassing 33.4% of all retail sales in 2013. On the other end of the spectrum, the Middle East accounted for just 2.1%.
Takeaway: Although there are trillions being sold online, internet retail sales have barely tapped the surface of what they can do. With Eastern Europe, Latin America, and the Middle East all combining for less than 10% of total retail purchases from an ecommerce platform, there are many opportunities to expand into these regions in the future to increase revenues. At the same time, as access to the internet becomes even easier than it is now in high purchase regions like North America, sales figures will increase as well. The reality is this: with only about 7% of total sales happening online, there is still a lot of potential for the next decade to have massive expansion in this area.
Expand the Reach
1. By 2017, 25% of mobile devices will account for at least one retail sale per year online in the United States.
2. Food purchases only account for 2.24% of online purchases. Office equipment accounts for just 3.08%. 5 other industries receive less than 10% of their overall sales from the internet.
3. 56% of people who purchase items on the internet will make multiple purchases throughout the year.
4. Cyber Monday sales exceeded Black Friday sales online by over $400 million in 2013 in the US.
5. Internet retail sales occurs in the 55-64 age demographic more often than any other age group.
6. Ecommerce is the fastest growing retail market in Europe.
7. Germany saw the largest growth for internet retail sales in 2013, seeing a 39.2% total increase. Total European growth last year was 21.1%.
Takeaway: Even though the United States sells more than $100 billion more in internet retail sales per year on average, what is interesting is the fact that the United Kingdom has a great share of the home market at 13.5% – compared to the 11.6% of the US market. On the other end of this spectrum, there is only a 2.1% home market retail share in Italy, yet 2013 brought this country 18.6% growth and this is expected to increase by 19% in 2014. This shows that with an expanded reach to these niche markets where home market influence is low, there could be massive growth in the next 5-10 years for businesses.
The Traditional Store Effect
1. Online retailers are expanding 11.9 times faster than traditional stores and shopping outlets in Europe, but only 3.3 times faster in the United States.
2. Tablet/Smartphone spending is expected to increase by over 65% in 2014.
3. Immature markets where access to high speed internet and communication lines will be the one safe haven for the traditional store.
4. 95% of people who shop online from their tablet make their purchases from home.
5. 72% of smartphone shoppers will make their internet retail purchases from home as well.
7. The average shopper makes less than 3% of their annual purchases online.
8. Almost as many people utilize their mobile devices to locate a traditional store as they do to make an online purchase from home.
Takeaway: Although the sales figures seem to speak of doom and gloom for the traditional retail industry, that is far from reality. The emerging markets of Europe are seeing explosive growth in the internet retail sector, but the mature markets have tapered off dramatically after seeing similar growth about a decade before. Some retailers might be a little discouraged by the fact that most people purchase items online from home, but it is encouraging to know that 70% of smartphone users will use their phone to direct them to a specific store in their community. All in all, internet retail sales seem to compliment the traditional store, not necessarily compete with it, and that trend looks to continue for the foreseeable future.
Online Vs. In Store
1. 42% of people say that they purchased an item online because they found it for a better price on the internet after shopping at a traditional retail outlet.
2. 46% of people who shop online say that they are less likely to compare products if they are making a purchase through a mobile app.
3. 50% of online shoppers say that the most essential component of internet retail sales, beyond price savings, are shipment tracking services.
4. 19% of people who make online purchases will shop at a traditional store first and then compare prices online.
5. 20% of people use a mobile device to comment about a purchase they’ve made online because they feel like it was a good deal.
6. 40% of women have researched at least one product online because they had access to a discount code.
7. Internet coupons are redeemed 10 times more than traditional coupons.
Takeaway: For the most part, people seem to be shopping online in order to get the best deal possible. If that deal isn’t available, then there is a greater likelihood that they will make that purchase from a traditional retail outlet. Although sales figures in the trillions is impressive in its own right, what is driving these sales, according to facts like these, is that the internet provides people with more access to better deals and more complete information if they want it. Businesses should take this information and begin developing their own apps for shoppers to use because that seems to reduce comparison shopping and establish brand loyalty better than anything else right now.
What Is The Market to Watch?
1. Mobile shopping in China has exceeded 150% growth for the last three years with a 486% growth rate in 2012.
2. Total internet retail sales from Chinese mobile users reached an equivalent of $25.5 billion.
3. Retailer Tmall controlled a 49.08% market share of the Chinese internet retail market in 2013, compared with Amazon who had just 2.72%.
4. It is estimated that over 9 billion packages were delivered in China in 2013, which would lead the world. Express delivery packages were up 61.9% in 2013 in a year-to-year comparison.
5. Registered stores in China that could reach communities and villages rose by 76.3% in 2013 and rural areas saw a 24.9% growth.
6. Ali Express allows for any consumer around the world to purchase goods from Chinese exporters directly.
7. Russia is also a competitive emerging market as nearly 99% of the Russian population owns at least one mobile device.
8. The one limiting factor in the Russian market is the devaluation of the ruble, meaning this average monthly salary in Russia is $812 per month.
9. 71% of Russian adults are expected to be able to connect to the internet by the end of 2014, or 80 million people in total.
Takeaway: The only reason why the Chinese market hasn’t completely exploded online is that there is a worldwide distrust of the quality of directly purchased Chinese goods. This is even evident within China as the country with the highest power rating and reputation in Walmart. As local manufacturers of goods work to improve their online reputation, this emerging market in the sphere of internet retail sales will continue to grow and influence internet retail sales. Why? As the facts show, most people go online to find the best deal possible and that’s exactly what Chinese goods and services are able to provide.
As for Russia, it all depends on the status of their economy. If they can become competitive on a global stage once again and re-establish confidence after the Crimea/Ukraine incident, their influence could hold a lot of weight as well.
Who Is Making Internet Retail Sales?
1. 40% of men who make at least $100k per year shop online at least twice per week and spend over $30k online annually.
2. 75% of men in this affluent category are over the age of 35.
3. 8% of men in this category research products and then have someone else purchase them on their behalf.
4. The #1 reason for shopping online in this affluent category is for travel purposes. The second most popular reason is for apparel.
5. The most researched luxury brand is Rolex, followed by Louis Vuitton and then luxury car manufacturers.
6. 35% of men in this category live in the Southern US.
7. 91% of men in this category are connected online every day in some way with their PC, while 1 in 2 have a tablet that they use to access the internet in some way.
8. 98% of these men make purchases online at least once per year, while 2 in 3 of them make multiple purchases per month.
Takeaway: Traditional retailers might find that marketing to women gives them more success, but it is affluent men who are driving internet retail sales. That’s why marketing to this specific demographic will become even more important over the next decade as incomes are expected to increase, especially in the US where income gaps are growing. With 55% Facebook saturation and 39% Google Plus saturation daily in this demographic, social marketing for online sales cannot be ignore either. The reality is this: if a man is rich and an American, then there’s a good chance that you can snag that man as a customer if you can show that your goods or services have some sort of value.