E-COMMERCE AND THE FUTURE OF RETAIL: 2015

A Research Service By Business Insider
THE FUTURE OF RETAIL: 2015

Retail is changing.
Source: Flickr / Joseph Brent

Digital is changing the way people shop.
Source: Flickr / Joseph Brent

We define “digital commerce” as purchases
that are made on desktop and mobile computers.
Source: US Economic Census
0%
2%
4%
6%
8%
Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015
Share Of US Retail Sales From Digital
Quarterly

Nearly all growth in retail now comes from this segment.
Source: US Economic Census
0%
5%
10%
15%
20%
25%
Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015
US Retail Sales, Year-Over-Year Growth
Overall Retail Digital Commerce

So what’s driving digital commerce growth?
Source: US Census, BI Intelligence
3.5%
14.8%
Overall Retail Digital Commerce
Annual Growth In 2015
US

Consumers are using smartphones and tablets
more as purchasing devices.
Source: US Economic Census, comScore
$0
$200
$400
$600
$800
$1,000
Q1 2012 Q1 2013 Q1 2014 Q1 2015
Billions
Overall US Digital Sales
Mobile Desktop

Social networks are now driving
more e-commerce than email.
Source: AddShoppers, Internet Retailer, BI Intelligence Estimates
$1,461
$652
$423 $422 $422
$59
Facebook Twitter Pinterest E-mail Google+ Other
E-Commerce Revenue Generated
From Social Media
Top 500 Retailers, Global, 2014
Estimates in millions

And shopping sites have gone global, allowing people
to shop wares from all around the world.
Source: Company Filings, BI Intelligence Estimates
0
50
100
150
200
250
300
350
400
Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014
Millions
Active Buyers On Top E-Commerce Marketplaces
Trailing 12 months; Global
Alibaba (Includes
Tmall and Taobao)
Amazon
eBay
Groupon
Etsy
Zalando

From a macro perspective, digital commerce
may not seem like much compared to in-store retail.
Source: US Economic Census, comScore
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q1 2012 Q1 2013 Q1 2014 Q1 2015
Thousands Overall US Retail Sales
In-store
Digital
(mobile +
desktop)

But look closer, by product category...
Source: US Economic Census, BI Intelligence
0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Digital's Share Of US Retail Sales
Media, Sporting, and Hobby Goods
Electronics, Appliances, Computers
Clothing and Accessories
Furniture and Home Furnishings
Health and Personal Care
Food and Beverage

And you’ll see that e-commerce is booming.
$0
$10
$20
$30
$40
$50
$60
$70
2005 2007 2009 2011 2013 E2015
Billions
US Digital Retail Sales, By Category
Food and Beverage

0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage
The “Media, Sporting, and Hobby Goods” Category
is leading the way.

Over 50% of these sales in the US now occur online.
Digital
In-store
$0
$20
$40
$60
$80
$100
2005 2007 2009 2011 2013 E2015
Billions
US Sales Of Media, Sporting,
and Hobby Goods

And digital media has become the fastest growing
e-commerce category in the US.
Source: ComScore 2015
-1%
2%
6%
6%
7%
8%
14%
14%
14%
15%
15%
17%
20%
21%
27%
Jewelry and Watches
Books and Magazines
Flowers and Gifts
Music, Movies, Videos
Video Games and Consoles
Event Tickets
Consumer Electronics
Toys and Hobby Goods
Home and Garden
Furniture and Appliances
Office Supplies
Sport and Fitness
Apparel and Accessories
Consumer Packaged Goods
Digital Content
YoY Growth of E-Commerce Sales, By Category
US 2014/2013

0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage
The “Electronics” category isn’t far behind.

Over 50% of these sales in the US now occur online.
Digital
In-store
$0
$20
$40
$60
$80
$100
$120
2005 2007 2009 2011 2013 P2015
Billions
US Sales Of Electronics And Appliances

Leading to the decline of some traditional retailers.
RadioShack filed for
bankruptcy in early 2015
after 11 consecutive
quarterly losses; the
company has since been
bailed out by Sprint.

0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage
The “Apparel” category is close behind.

Approximately one-fourth of apparel sales in the US
now occur online.
Digital
In-store
$0
$50
$100
$150
$200
$250
$300
2005 2007 2009 2011 2013 E2015
Billions
US Sales Of Apparel

But younger shoppers still prefer the flexibility
of shopping for clothes at stores and online.
Source: Piper Jaffray
36%
19%
36%
39%
64%
81%
64%
61%
Fall 2013 Spring 2014 Fall 2014 Spring 2015
US Teens Preferences When Purchasing
Clothing OnlineOnline-Only Retailers
Online Retailers With
Stores

So while many traditional apparel retailers are holding on
by a thread, the ones that survive will be those that diversify
into e-commerce.
Source: Shutterstock

Let’s see how those traditional apparel retailers
are faring...
Source: AP

JCPenney relies way too heavily on in-store sales,
which account for 99% of its business.
Source: JCPenney, Internet Retailer, BI Intelligence Estimates
Digital
In-store
0
5
10
15
20
25
2004 2006 2008 2010 2012 2015
Billions
JCPenney Annual Retail Sales
Global

And JCPenney’s growth has been inconsistent,
trending downward overall.
Source: JCPenney, Internet Retailer, BI Intelligence Estimates
-40%
-20%
0%
20%
40%
2006 2007 2008 2009 2010 2011 2012 2013 2014
JCPenney Sales Growth
Global, year-over-year
Digital In-store

Gap’s business is much more diversified than
JC Penney’s; 15% of Gap sales come from digital.
Source: Gap, Internet Retailer, BI Intelligence
Digital
In-store
$0
$4
$8
$12
$16
$20
2007 2008 2009 2010 2011 2012 2013 2014
Billions
Gap Annual Retail Sales
Global

And although Gap’s growth is decelerating,
it’s still trending upwards overall.
Source: Gap, Internet Retailer, BI Intelligence
-20%
-10%
0%
10%
20%
30%
2008 2009 2010 2011 2012 2013 2014
Gap Sales Growth
Global, year-over-year
Digital In-store

Furniture has been steadily disrupted by shoppers
going online to purchase home goods.
0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage

Digital now accounts for 28% of furniture sales in the US.
Source: Us Economic Census, BI Intelligence
Digital
In-store
$0
$20
$40
$60
$80
$100
$120
$140
$160
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 P2015
Billions
US Sales Of Furniture

Now the categories with the greatest potential
for disruption…
Source: Flickr/Foad Hersi, Jamie

Health and Personal Care is on deck to be completely
disrupted by e-commerce.
0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage

Americans today spend over $300 billion a year buying health
and care products. Only 7% of that is done online.
Source: US Census, eMarketer, BI Intelligence
Online Sales
Offline Sales
$0
$100
$200
$300
$400
2001 2003 2005 2007 2009 2011 2013 E2015 E2017 E2019
Billions
US Sales Of Health And Personal Care Products

But by 2020, digital will account for $1 in every
$10 spent on health and care products.
Source: US Census, eMarketer, BI Intelligence Estimates
0%
4%
8%
12%
2001 2003 2005 2007 2009 2011 2013 E2015 E2017 E2019
E-Commerce Share Of Health And Personal Care Retail
Sales
US

That’s nearly $40 billion.
Source: US Census, eMarketer, BI Intelligence
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2001 2003 2005 2007 2009 2011 2013 E2015 E2017 E2019
Billions
US E-Commerce Sales Of
Health And Personal Care Products

Among health and beauty shoppers, Amazon
is the most popular e-commerce destination.
Source: AT Kearney, 2014
18% 18% 19% 20% 22% 23% 24% 25% 25% 27% 28%
32%
35%
42%
73%
Where US Consumers Shop Online For Personal Care
And Beauty Products

Four out of ten online health and beauty shoppers
use subscription services to refill products they need.
Source: AT Kearney, May 2014
No
62%
Tools, 1%
Fragrances, 3%
Nail Care, 4%
Color Cosmetics, 5%
Hair Care, 5%
Personal Care, 6%
Skin Care, 8%
Other, 6%
Yes
38%
Subscription E-Commerce Services: Health And
Personal Care Products
US, 2014
A) Do you use subscription services in order to
receive health and personal care products on a
recurring basis?
B) For which types of products?

Birchbox capitalizes on this and generates over a quarter-billion
dollars every year from its beauty subscription business.
Source: News Announcements, BI Intelligence
74 250
533
1,152
2,304
$0
$50
$100
$150
$200
$250
$300
2010 2011 2012 2013 2014 E2015
Millions
Birchbox Subscription Business Annual Revenue
BI Intelligence Estimates
Subscribers (In Thousands) Subscription Revenue

But Amazon is the most popular e-commerce destination for
everyday products.
Source: comScore
175.09
81.92
50.84
7.84 3.38 2.98 0.91
Amazon Walmart Target Kroger Safeway SuperValu Albertsons
Monthly Visitors To Online CPG Shopping Destinations
US, March 2015
In Millions

Groceries are the biggest opportunity in e-commerce.
0%
10%
20%
30%
40%
50%
60%
2005 2007 2009 2011 2013 E2015
Food and Beverage

Americans spend $600 billion a year buying groceries, but
less than 1% of that is online.
Source: BI Intelligence
$0
$200
$400
$600
$800
2002 2004 2006 2008 2010 2012 E2014 E2016 E2018
Billions
US Grocery Sales Forecast
Offline
Online

Demand isn’t the issue. Consumers of all ages are willing to
try grocery e-commerce services.
Source: Nielsen
9%
17%
22%
30%
28%
35%
48%
57%
57%
55%
Silent Generation (65+)
Baby Boomers (50-64)
Generation X (35-49)
Millennials (21-34)
Generation Z (15-20)
Consumers Ordering Groceries Online For Home Delivery, By Age
(Global)
Already Using
Willing To Use

And cultural differences aren’t the issue either.
Demand spans all geographic markets.
Source: Nielsen
13%
12%
13%
19%
37%
50%
55%
65%
58%
53%
Europe
North America
Latin America
Middle East-Africa
Asia-Pacific
Consumers Ordering Groceries Online For Home Delivery
By Region
Already Using
Willing To Use

Source: Lonely Planet via Getty Images
So what is holding back digital from disrupting groceries?

The issue is that consumers don’t have the option.
Only 5% of supermarkets offer mobile ordering.
Source: AppLovin, July 2014
83%
75% 73%
50%
5%
Online Retail Department Store Restaurant Chain Pharmacy Supermarket
Share Of Top US Retailers With An App That
Has Purchasing Capabilities
Top 100 Retailers By Segment

And we know that consumers want to order
groceries on mobile.
Source: PricerwaterhouseCoopers, October 2014
63% 68% 73% 74% 80% 84% 86% 86% 89%
37% 32% 27% 26% 20% 16% 14% 14% 12%
Grocery
Furniture
Healthandbeauty
Sportsequipment
Jewelry
Householdappliances
Apparel
Books,music,movies
Electronics
Breakdown Of E-Commerce Sales By Channel
US
PC Mobile

Consumers spend more money when buying groceries online
than if they were in a supermarket.
Source: Greycroft Science, Earnest Research
$61.20
$71.07 $68.47
$79.70
$112.63
$166.83
$42.18
$49.38 $51.79 $52.32
Average Order Value, E-Commerce Grocery Services
And Traditional Supermarkets
Repeat customers only; February 2015
Fixed Subscription Subscription + Choice A la Carte Traditional Grocery

And online grocery shoppers make multiple
orders per month.
2.35
2.18 2.18
2.89 2.9
1.73 1.83
3.59
2.17
2.83
Transactions Per Month Per Customer,
E-Commerce Grocers And Traditional Supermarkets
Repeat customers only
Fixed Subscription Subscription + Choice A La Carte Traditional Grocery

Especially those repeat customers.
1.76
1.52
1.69 1.65
2.35
2.18 2.18
2.89
Blue Apron Hello Fresh Plated Instacart
Transactions Per Month Per Customer,
By E-Commerce Grocery Service
New customer Repeat customer

Online grocers, such as FreshDirect, are generating 2x more
money per customer per month than traditional supermarkets.
$144 $155 $149
$230
$327
$289
$77
$177
$112
$148
Average Spending Per Customer Per Month,
E-Commerce Grocers And Traditional Supermarkets
Fixed Subscription Subscription + Choice A La Carte Traditional Grocery

We estimate that Instacart will handle $600 million
a year in online grocery orders by 2016.
Source: News Filings, BI Intelligence
$0
$100
$200
$300
$400
$500
$600
$700
2012 2013 2014 P2015 E2016
Millions
Instacart Annual Sales Handled
BI Intelligence Estimates

Now let’s look at how the mass merchants are faring: the
retailers that sell all of these products.

Amazon’s growth has decelerated;
but it’s still outperforming competitors.
Source: Amazon
$11
$8 $8 $9
$14
$10 $10
$11
$17
$13 $13
$14
$21
$16
0%
20%
40%
60%
80%
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Amazon Retail Revenue
In $ Billions; Global
YoY Growth

eBay is in a downward spiral.
Source: eBay
$16 $16 $16 $16
$19
$18 $18 $18
$22
$21 $20 $20
$22
$20 $20
-6%
0%
6%
12%
18%
Q4 2011 Q4 2012 Q4 2013 Q4 2014
eBay Gross Merchandise Volume
In $ Billions; Global; Ex-Auto
YoY Growth

Walmart still relies heavily on brick-and-mortar sales.
Source: Walmart, Internet Retailer, BI Intelligence
$0
$100
$200
$300
$400
$500
$600
2010 2011 2012 2013 2014
Billions
Walmart Annual Sales
Global
In-store Digital

As does Target.
Source: Target, Internet Retailer, BI Intelligence
$0
$10
$20
$30
$40
$50
$60
$70
$80
2011 2012 2013 2014
Billions
Target Annual Sales
Digital
In-store

But Target leads Walmart when it comes to e-commerce.
Source: Target, Walmart, BI Intelligence
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
2011 2012 2013 2014
E-Commerce Share Of Revenues
Target Walmart

Conversion rates are rising on mass merchant e-commerce sites, which
means that shoppers aren’t just browsing online, they are buying.
Source: Kantar Retail ShopperScape, December of each year
31%
46% 46%
80%
36%
49%
56%
86%
36%
54% 56%
82%
48%
58% 60%
85%
58%
63%
66%
89%
Target.com Kohls.com Walmart.com Amazon
Holiday E-Commerce Conversion Rate
Shoppers who purchased on website as % of total website visitors
*Desktop-only, US-only
2010 2011 2012 2013 2014

And digital isn’t just disrupting how people shop,
it’s also changing the way they receive their purchases.
Source: Flickr, US Department of Labor

Consumers are demanding faster delivery.
Source: Stony Brook University
4%
31%
35%
23%
7%
Same or next day Two to three days Four to five days More than five days Depends
Delivery Speed Option Selected Most Often
Answered by US e-commerce shoppers
Q1 2015

So retailers are getting competitive with lower thresholds for
free shipping.
Source: Company info
$99 $99
$75
$50 $50
$35
$25
JCPenney.com Macys.com Kohls.com Walmart.com Gap.com Amazon.com Target.com
Minimum Order Value Required For
Free Standard Shipping
US, February 2015
*Note: As of February 24, 2015

The demand for fast shipping has benefitted on-demand
delivery startups like Postmates.
Source: Postmates, BI Intelligence Estimates
0
200
400
600
800
1,000
1,200
1,400
1,600
May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15
Thousands
Postmates Cumulative Deliveries
US-only

Retailers and shippers will look to technology to lower the cost of delivery,
which is why companies—from Google to Uber to Amazon—are interested
in autonomous vehicles.
Source: ARK Research
$2.25
$2.15
$0.76
$0.25
San Francisco Taxi UberX Personal Vehicle *Shared Autonomous
Vehicle
Estimated Cost Per Mile Of Vehicle Services For Consumers
US
*Estimate for the year 2020

And they’ll also look to technology to help
increase the speed of delivery.
Source: ARK Investment Management, Company info
Amazon Prime Air*
$1.00
Amazon Same-Day
$8.99
Google Shopping
$4.99
UPS Ground
$12.92
FedEx Ground
$8.32
USPS Priority 1-Day
$5.25
$0
$2
$4
$6
$8
$10
$12
$14
DeliveryFee
Delivery Fee That Consumers Pay For A Small Package
2.2kg (5lb) package delivered within 16.1km (10 miles) in the US
30 MINUTES SAME-DAY NEXT-DAY
*Launch date unknown, and delivery fee is an estimate

It’s technology that is driving the digital disruption
of retail.

Sign up for BI Intelligence for more content like this
Subscribe to Business Insider’s research service to get
rich analysis and key insights on today’s most relevant
topics in the digital landscape
intelligence.businessinsider.com

intelligence.businessinsider.com
Henry Blodget
CEO & Editor-in-Chief
Emily Adler
Managing Editor
Barbara Peng
Vice President,
Research
Cooper Smith
Senior Research Analyst
BI Intelligence
Nancee Halpin
Research Associate
BII E-COMMERCE

E-COMMERCE AND THE FUTURE OF RETAIL: 2015

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (20)

Similaire à E-COMMERCE AND THE FUTURE OF RETAIL: 2015

Similaire à E-COMMERCE AND THE FUTURE OF RETAIL: 2015 (20)

E-COMMERCE AND THE FUTURE OF RETAIL: 2015