Comscore’s 2016 Retail eCommerce announced it’s 2016 total U.S. sales results this week. Overall, the eCommerce share of U.S. retail sales amounts to just eight percent. As GDP grows, retail’s total sales have dwarfed eCommerce’s growth, preventing online from gaining significant share of sales for several years running. The battle, it appears, is between desktop and mobile use among online buyers, but most people still make their purchases in physical locations.
BIA/Kelsey expects the share of eCommerce to rise as local on-demand services force a reconsideration of local retail and service delivery strategies over the next decade.
[In Q4, 2016] $109.3 billion was spent online, marking an 18-percent increase versus the same quarter in 2015. The majority of online buying occurred on desktop computers, with $86.6 billion spent, up 13 percent vs. year ago. Meanwhile, m-commerce spending on smartphones and tablets contributed $22.7 billion, with a significantly higher year-over-year growth rate than desktop at 45 percent. (See figure below, Total Online Retail Spending for Full Holiday Season: 2016 vs. 2015)
That’s healthy growth within the eCommerce sector. Mobile, as would be expected, is grabbing eCommerce share from desktop and, at least during the holidays, accounted for 21 percent share of all retail, up 44 percent from the 2015. But for the full year, eCommerce did not make significant headway against traditional retail, and that defines the main challenge for the next decade: Bringing the other 90 percent of U.S. shoppers into mainstream eCommerce.
Excluding food services, U.S. retail was valued at $5.23 trillion in 2015. Online and mobile retail eCommerce for the full year, according to the U.S. Census and Comscore’s $109.3 billion Q4 estimate,the total eCommerce revenue in 2016 was $400.9 billion, or ~7.6 percent of total U.S. retail sales for the year.
Granted mobile’s big contribution at the holidays, which lifted eCommerce to 18 percent of all U.S. retail sales in Q4, points to more growth as smartphones market penetration exceeds 80 percent in 2017. But we see a conceptual blocker for consumers and retailers alike: eCommerce has claimed some shoppers’ confidence. Consumers’ integration into the digital economy is not sufficiently deep to bring more of their spending online.
Mobile technology and payment solutions are important to advancing eCommerce’s market share. More important, we suspect, is the rise of local retail and employment solutions for service and support workers, which will bring consumers closer to brands in novel ways. At the point where brands succeed in localizing their value proposition to demonstrate support for their customers’ digital prosperity — in the form of on-demand and subscription solutions that connect human interaction to digital marketing — eCommerce will be poised to leap ahead. By 2025, half of all retail transactions should have moved online, and we await these catalysts.
Now, however, the battle between desktop and mobile eCommerce services is an important and compelling side-show. Mobile will certainly continue to claim more of existing eCommerce revenue.
The profound changes shaking the economy based on improved logistics, marketing message targeting, virtual organizations and brand customer experience through multiple channels will produce a naturally digital interaction with consumers. That’s the change that will unleash the adoption of eCommerce in retail at a scale similar to Web adoption over the past 25 years.