e-Commerce: A Year in Review

As we start the new year it’s only natural that we look back at 2017 to gain perspective on where we are and where we are going. With new studies and data coming out daily, there are underlying themes emerging, notably that e-commerce is bigger than we thought.

At the beginning of 2017, the National Retail Federation (NRF) had predicted that nonstore sales would grow between 8-12%. Instead we saw a 15.1% increase in e-commerce sales in the first quarter compared to Q1 of 2016, followed by an astonishing 16.3% in Q2, an increase not seen in five years.

I bring this up while sitting on my throne of hindsight not to point out the error of NRF’s growth prediction, but to illustrate how e-commerce is year over year–growing at a faster rate than (traditional, off-line) retail growth. E-commerce’s share of total U.S. retail sales is growing year over year and companies that aren’t adapting to the new e-commerce reality are likely to be left sitting in their vacant stores because the Retail Apocalypse is real.

Okay, “Retail Apocalypse” might be exaggerating the situation a little but the trends are clear that brick and mortar–especially in the U.S.–have had their time in the spotlight and are being forgotten by newer generations who are more likely to participate in online commerce.

As traditional retailers are reeling from poor brick and mortar real-estate decisions made decades ago, Amazon is quickly gobbling up online market-share, notably Millennials, by getting them signed up as Prime Members. According to several reports, half of all U.S. households are now Amazon Prime subscribers. While the number of brick and mortar stores is in decline, Amazon is rising.

“83% of U.S. online adults made a purchase from Amazon in 2016, and 55% used Amazon as a research resource before making a purchase,” Forrester senior forecast analyst Susan Wu writes.

Remember earlier when we looked at that outstanding second quarter growth in e-commerce sales in 2017? Well, according to an estimate by Internet Retailer, Amazon took home roughly 38% of e-commerce sales during that quarter.

Seeing a recurring theme here? As e-commerce grows as a total market share of all retail purchases, Amazon is consistently outpacing the competition in seizing those online customers and bringing them into the Amazon Prime fold. The importance of this early bird customer acquisition will play out further as more companies compete for mobile customers because currently, mobile is hard.

Research done by the University of East Anglia shows that only 27% of purchases begun on mobile were completed. Primary reasons mobile shoppers stop their sessions include poor item visibility and pertinent details on a small screen causing prospective buyers to worry they are missing something important, a difficult checkout process, and having to sign up for an account.

I’m going to sound like a broken record here, but Amazon is handling this better than the competition. Most notably, Amazon has already signed up a lot of households for Amazon Prime, thus alleviating the “I don’t want to sign up” protest of fleeing customers. Amazon already has your billing and shipping information to make the transaction as easy as possible.

The good news in all this? We don’t serve our overlord master Amazon just yet. The bad news? As (non-Amazon) e-commerce sales continue to grow every year, Amazon is taking a larger and larger bit of total e-commerce sales every year. Consequently, retailers who don’t adapt and innovate will be left serving our One-Click lord.

“You don’t think you’ll bow to me someday?!”

But the end is not quite neigh. As the age of the super store declines, retailers have the opportunity to develop their online stores using intelligent technology focused around capturing and retaining new customers. Companies like Metrical (have to plug ourselves at least once!) are working to provide retailers with intelligent, and predictive, e-commerce solutions focused on understanding and reducing cart abandonment, and converting shoppers into buyers. Combined with other post-abandonment solutions, retailers are better positioned to bring in new, potentially loyal, customers. As we sit on the precipice of the Age of Amazon, retailers must adapt their e-commerce approach or face the same fate as Borders.


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