How Fast is Online Retail Increasing in Total Retail Sales?

• Published on July 6, 2016
• Featured in: Retail & E-Commerce

Michael Spencer

Copywriter & Personal Brand Consultant at Freelance

One of the most debated trends in retail and business is the rise of online Ecommerce as influencing physical brick-and-mortar retail sales. Is the change to more convenient shopping inevitable? How fast will it continue to grow? What are the trends that influence it. These are just some of the questions I'm always considering as an amateur retail technology enthusiast. 

Consider that in the end of 2009, Ecommerce accounted for just 4.20% of US E-commerce sales as a percent of retail sales. Today, as of April, it's 7.80%. This represents a quarterly annualized growth rate of 16.00%, compared to a long term average annualized growth rate of 16.49 percent. While this may not seem like much, it's an accelerating trend. 

These figures it must be understood, are is the US where an abundance of physical retailers exist and multiple brands compete in an ecosystem with a lot of physical infrastructure.

Both big-box chains and SMB independent retailers make our shopping experiences immersive in North America, however there's no question that mobile commerce will continue to disrupt physical locations.

In other markets internationally there is far less friction for online retail to easily become more dominant and lead global trends in new directions. This is exactly what's happening now. As the major tech companies are recognizing China and India are the last frontier. 

In China, online retail is not only more dominant, it's growing faster:

 By 2018 in China, Online retail will represent 28.6% of the Market share of retail sales. 

With annual growth nearly double that of the US, it's clear that mobile commerce is being led by Asia where mobile commerce on SMS appeared literally years before it has in the West. 

Amazon Reigns in the West

With the news that Amazon beats out Google even in product search to say that online commerce is a game changer, would be an understatement. This also shows the utter dominance of Amazon in online retail with a ripple effect in how retail is done from this point forwards. 

With China and India as the final frontiers, we are entering an era of the total rule of global corporations as they position themselves to take online retail to the next level with the advent of the smart home via Amazon Echo and Google Home. 

Amazon accounted for $0.51 of every $1 of growth in online retail

With Macquarie Research analysts pointing out that Amazon accounted for an astounding $0.51 of every $1 of growth in U.S. e-commerce during 2015, we are entering an age of just a handful of tech companies dominating most of what we do online, in apps and consequently are set to become the future of how online shopping will work.

With Amazon grabbing 24% of total retail growth in the United States, it's not just putting stores out of business, it will challenge Apple, Google, Facebook and Microsoft for global supremacy in multiple verticals including how mobile traffic for services we need. 

IoT, chat-bots, VR - every major technological innovation fuels the top global companies to gain a greater share of all global web traffic, market shares and profits. 

Amazon is in a sense then, the very archetype of the global corporation, ruthlessly efficient and gigantically innovative. Disruptive in the most tangible and pragmatic sense, riding the wave best of consumer trends, and directing the on-demand economy. 

It's Amazon Prime day on July 12th. Its the second annual Prime Day sale, Prime members will have access to more than 100,000 deals. Amazon will undoubtedly try to get every deal offered down to the lowest price it’s been on Amazon in at least 12 months, if not longer. It’s definitely an opportunity for savings.

By 2020, online retail should show perhaps even faster growth. Forrester says the number of consumers browsing and buying online will hit 270 million by 2020, driven largely by activity on mobile devices. 

Online sales will reach $523 billion by 2020 in the U.S.

In China, even those with an average mid-range income are still going for luxury brands as status symbols. With more of the developing world coming online, and expected speeds increasing in mobile networks, this can only set to significantly boost the ease of which mobile commerce will work and the multiple competing channels.

Buying directly via Pinterest or Instagram is easier than ever, and there are a greater variety than ever of Ecommerce showcase sites where multiple brands are featured. 

With China leading the way, Ecommerce one day won't be the minority, it will be the majority. 

Are you spending more retail $ in online shopping than a couple of years ago? How quickly do you believe Ecommerce will continue to grow where you live?