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Quick fact: e-commerce represented 14.5% of total retail sales in the fourth quarter of 2018 (source: U.S. Census).
Great American’s Retail Monitor March 2019 (PDF) issue focused on the continuing growth of e-commerce and how Amazon’s marketplaces are forcing retailers to either sell through Amazon or invest heavily in their own website product offerings and features. This post takes a look at GA’s findings, including: e-commerce sales trends, how retailers are adapting to changing trends, how shipping remains a crucial factor in online sales, and technological advancements in selling through mobile devices.
As shown in the chart, in the fourth quarter of 2018, e-commerce sales represented 14.5% of total retail sales, with steady progression from quarter to quarter. Overall, e-commerce sales increased around 15% year over year, in line with previous reports from CBRE and others.
When it comes to e-commerce, Amazon has staked its claim at the top of the hill by offering marketplaces for retailers to sell their goods. As GA reports, many small to medium sized retailers have opened a shop through the Amazon marketplace or they sell through the FBA program (Fulfilled by Amazon). For major retailers, competing with Amazon means investing heavily in their own third-party sellers for top categories, including toys, sporting goods, and electronics. Major retailers have also started to mimic Amazon by offering free, two-day shipping for qualifying orders.
Shipping is a major cost factor when it comes to e-commerce and it isn’t getting cheaper. Amazon’s Prime option is considered the gold standard for the industry. To qualify for free, two-day shipping, customers pay a yearly fee, which jumped to $119 in 2018. The Prime option is tough to beat for other retailers as offering free shipping cuts sharply into profits. To help offset the costs, one tactic is to offer free shipping with a minimum order of anywhere from $35 to $99, depending on the retailer.
For retailers with brick and mortar locations, the ability to order online and pick up in store is another way to reduce shipping costs. Plus, retailers have found that this type of omnichannel approach increases foot traffic (read more about how an omnichannel approach can help increase in store foot traffic).
A new shipping feature recently announced by Amazon is to allow the customer to pick a specific day of the week to receive packages. This tactic reduces the total number of packages shipped and allows more items to be shipped in bulk; both of which reduces shipping costs.
When it comes to e-commerce, retailers need to think outside-the-laptop, meaning, online sales are taking place more often on tablets, phones and even home hubs (read more on how consumers are shopping through smart hubs like Alexa and Google Home Hub). M-commerce sales (sales made through a phone or tablet) continue to grow and major retailers are investing in high-functioning apps that are personalized with targeted marketing built in.
Returns are the rule in retail. For items that can’t go back on primary shelves, talk to B-Stock for your own private, auction marketplace to sell returned, excess, and other liquidation inventory. This technology-driven approach will increase recovery rates on consumer returns and will keep warehouse inventory moving.
We also invite you to review our case studies and our suite of private marketplaces that we operate for 9 of the top 10 U.S. retailers, including hundreds more in the U.S and internationally across Europe.Request Demo