14 December 2016
E-commerce is the fastest-growing retail business in Europe and North America, with global sales expected to reach nearly $2 trillion this year. In large part, growth can be attributed to online retail sites becoming more reliable and user-friendly, with much faster shipping.
As a consequence, the holiday season – retailers' biggest time of year – is fast becoming one of the main casualties for brick-and-mortar stores as shopping habits evolve.
Online holiday sales are expected to rise 17% in 2016, which would take its share of total holiday season sales past 10%, a major milestone.
According to a 2016 Deloitte report on US holiday spending, shoppers there will spend half their holiday budget online – a figure that represents another significant turning point in consumer behavior.
The impact, in particular, of big data and predictive analytics on customer outreach is ever-growing and, consequently, retailers are employing more people-centric models – both online and in-store.
E-commerce now goes far beyond simply browsing the web – it has evolved into an end-to-end customer journey, with retail companies boosting online and physical sales by designing new business strategies around customer experience, rather than by channel.
For example, Sears Hometown and Outlet Stores (SHOS), a US retailer, has introduced local inventory ads, which target nearby consumers who are looking online at products that the SHOS carries. The ad will show the availability of similar items at any nearby local stores, along with hours of operation and other helpful information like directions. The result: over twice as many store visits.
That said, it is important to note that the top countries for online shopping – China, the US, the UK, Japan and Germany – made up almost 75% of worldwide e-commerce sales in 2015, so there is plenty of room for growth.
Chinese consumers may have spent over $500 billion shopping online in 2015, but that only made up 12% of the country’s total retail spending.
Most emerging markets lag even further behind. Consider India, for example, where only 1.6% of total retail sales were online.
Finally, e-commerce constituted just 6.7% of global retail spending last year – a very modest piece of the pie. As the world keeps going digital, online retailers will be doing what they can to continue redefining the industry and to consolidate more of the retail market.