Filter by Category

A Closer Look into the Growth of E-Commerce Sales

It is widely known that e-commerce sales have been growing and shifting sales from traditional brick-and-mortar establishments. As noted below, overall e-commerce sales in fact still account for a relatively modest percentage of total retail sales. That said, the percentage of e-commerce sales related to total retail sales continues to grow, and is especially pronounced in certain retail sectors. It is interesting to examine how and where that growth is taking place.

Every year since the first quarter of 2007, increases in e-commerce sales outpaced the overall growth of retail sales. This held true even during the third quarter of 2008 through the third quarter of 2009, when the decreases in e-commerce sales were not as great as the overall decrease in retail sales.

The Census Bureau of the Department of Commerce defines e-commerce sales as sales of goods and services where the buyer places an order, or the price and terms of the sale are negotiated over an internet, mobile device, extranet, Electronic Data Interchange network, electronic mail, or other comparable system, whether or not payment is made online. By that measure, in the first quarter of 2016, e-commerce sales represented 7.8% of total U.S. retail sales. If items that are not typically purchased online such as automobiles and fuel are excluded from the calculation, in the first quarter of 2016 e-commerce sales represented 11.2% of total U.S. retail sales. While total retail sales for the first quarter of 2016 were up 2.2% from the first quarter 2015, e-commerce sales were up 15.2% in the same period.

The two industries with the greatest percentage of e-commerce sales are apparel and computers and consumer electronic products. While e-commerce sales of computers and consumer electronics have traditionally outpaced sales of apparel, in 2015 online purchases of clothing and accessories eclipsed sales of computers and consumer electronics for the first time. Companies’ return policies, including free shipping and ease of returns, are thought to help bolster clothing sales. However, the data does not take into account consumers buying clothing in multiple sizes and returning items that do not fit.

Although online sales of food and beverage and office supplies are growing at the smallest rate, those sales grew 15.2% and 15.1% over the previous year in 2013.

While online sales by smaller and larger companies are both growing, in 2015 there were several categories in which the online sales by smaller companies grew by a greater percentage than online sales by the largest 500 companies. Those categories are Apparel/Accessories, Automotive Parts, Accessories, Computers/Electronics, Food/Drug, Jewelry, Mass Merchant, Office Supplies and Sporting Goods. As a result, the growth of online sales by smaller companies outpaced the growth of online sales by larger retailers.

E-commerce sales in the U.S. for 2016 are forecasted to exceed $550 billion. Furniture and home décor and handmade products are two retail categories that are expected to see increased e-commerce footprints. Furniture and home décor, which has traditionally not trended towards e-commerce in the same manner other industries have, began to see increasing e-commerce sales in 2015. These sales have most likely been bolstered by updated technology and graphics allowing multiple ways to view furniture as well as free delivery and easy return policies. Amazon recently launched “Amazon Handmade” and Etsy went public in April of 2015 giving sellers of handmade products and crafts an ability to increase their e-commerce footprint.

The brick-and-mortar divisions of retailers are fighting back against the increase in e-commerce sales as a percentage of total sales with enhanced omnichannel retail strategies, such as making retail stores more interactive and increasing connectivity to mobile devices and applications. As they say, if you can’t beat them, join them.

Related topics: Retail, Retail Sales