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A Brief History of E-Commerce

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A Brief History of E-Commerce A Special Report brought to you by THE MEDIACENTER The Growth of E-Commerce, Q1 2004–Q1 2016 A Brief History of E-Commerce Quarter/Year Total % of All Retail Sales Q1 2004 $17.10 billion 2.00% As with most technological advancements, we are quick Q1 2006 $26.88 billion 2.80% to attribute major milestones to a single individual at an Q1 2008 $36.01 billion 3.60% exact moment. Yes, the Wright brothers were the first to achieve sustained, controlled flight, but they would have Q1 2010 $39.43 billion 4.20% never lifted off the sands of Kitty Hawk without many Q1 2012 $54.96 billion 5.10% individuals experimenting with the concept of flight during Q1 2014 $70.30 billion 6.20% the past centuries. Q1 2016 $92.80 billion 7.80% Such is the case with the history of e-commerce. Although YCharts (US Census Bureau), June 2016 the birth of the Internet existed in its earliest form during the 1970’s, it wasn’t until 1998 that security protocols were Despite the small percentage that e-commerce has developed that would allow for safe financial transactions captured of all retail sales, its influence and potential is online. Initially, e-commerce was actually business-to- much greater than its 7.80% share represents. It delivers business transactions totaling approximately $700 billion consumer convenience that is difficult, if not impossible, to during 2001, an amount that retail e-commerce in the US match and is the major disruptor technology of the entire hasn’t even come close to achieving. retail landscape. According to the US Census Bureau, since the end of Q1 The purpose of this Special Report from THE MEDIACENTER 2004, US e-commerce sales have increased from $17.10 is to expand your knowledge and understanding of billion to $92.80 billion for Q1 2016, a 447% increase during e-commerce, so you can help your clients maintain the a mere 12 years. The Q1 2016 total was just 7.80% of all vitality and viability of their brick-and-mortar presence as retail sales of $1.184 trillion. they also benefit from all e-commerce has to offer them and their customers. www.mediacenteronline.com pg. 2 The Bigger Picture Amazon: The Giant of E-Commerce To say Amazon dominates e-commerce would be an Forrester estimates total US online retail sales will reach understatement. According to Forrester, Amazon generated $372.5 billion during 2016, and then increase 42.4% by $23 billion in US e-commerce sales during 2015, which was 2020, to a total of $530.6 billion. Forrester’s “bigger picture” 60% of the total increase in US online sales. of e-commerce also has Q1 2016 online retail sales accounting for 11.1% of all retail sales, compared to the US “Exploring the Amazon,” a July 2016 New Media Insights Census Bureau’s 7.80%. (NOTE: Because the US Census Report from THE MEDIACENTER, reveals many of the Bureau and Forrester Research define retail e-commerce reasons Amazon is the giant of e-commerce, but its differently, Forrester’s estimated total sales is much larger influence also extends to the warehouse industry. than the Census Bureau’s.) Since Q2 2015, rental rates for prime warehouse space have US Online Retail Sales, 2015–2020 increased 9.9% for the entire US and double-digits in many large metro areas. Green Street Advisors estimates that Year Total Total Online Buyers e-commerce is driving 20% of the new demand. Amazon 2015 $338.1 billion 185.5 million has turned the supply-chain segment of the retail industry 2016 $372.5 billion 189.7 million upside down. Traditionally, it has been considered a cost of doing business, but Amazon is using its rapid expansion 2017 $409.8 billion 193.7 million of distribution centers as a growth advantage that no other 2018 $448.5 billion 197.8 million retailers can currently match. 2019 $488.9 billion 202.0 million Jeramey Lende / Shutterstock.com 2020 $530.6 billion 206.2 million Forrester Research, Q4 2015 Forrester found that retailers consider online marketing and merchandising major priorities for 2016 and the development of omnichannel services, such as ship-from-store and in- store pickup programs, have much to do with their online sales success. That being said, many retailers have not advanced the use of the mobile channel for e-commerce, as 78% of consumers are not pleased with download times and screen-size limitations. www.mediacenteronline.com pg. 3 How Device Ownership Affects Changes in Shopping Habits E-Commerce by Device During Past 12 Months More Less No Device According to Bronto Software’s most recent survey on Frequently Frequently Difference consumer device ownership, American adults owned Laptop 57% 10% 32% an average of 2.9 devices, with the laptop as the most prevalent. Approximately 90% of adults, 18–24 and Smartphone 64% 8.5% 25% 25–34, either owned or had access to a laptop, closely Desktop 57% 10% 31% followed by adults, 35–44, at 79%, and those 55+ at Tablet 60% 10% 26% approximately 72%. Wearable 79% 3% 11% The following table presents a quite different picture when Physical Store 29% 30% 40.5% comparing device ownership and shopping and purchasing Bronto Software, 2016 habits. Overall, the Bronto survey discovered that consumers used approximately the same number of devices for One of the most telling takeaway for retailers is that 30% shopping and purchasing, 1.9 and 1.8, respectively. of consumers said they shopped less frequently at brick- and-mortar stores, but 29% said they shopped more frequently. These nearly equal results are attributed to age Device Ownership and Shopping and and income differences. Purchasing Habits, 2016 Device Own Shop Purchase Laptop 80% 62% 61% ■ 43% of adults, 25–34, and all adults with household incomes of less than $75,000 shopped Smartphone 75% 41% 38% more frequently at brick-and-mortar stores. Desktop 67% 49.5% 49% Tablet 59% 28% 23% ■ Adults, 18–24, and those with household incomes of $100,000 or more shopped less frequently in Wearable 12% 4% 4% physical stores. Bronto Software, 2016 The change in shopping habits by device during the past 12 months (early 2015 compared to early 2016) reveals some A comparison of devices used for making purchases by age interesting takeaways. is also very insightful, as, not surprisingly, younger adults, 18–44, are more likely to use laptops and smartphones and older adults, 45+, make more purchases on desktops. Devices Used for Purchases by Age, 2016 Device 18–24 25–34 35–44 45–54 55–64 65+ Laptop 74% 76% 70% 58% 53% 52% Smartphone 63% 61% 58% 30% 19% 8% Desktop 38% 41% 42% 53% 52% 61% Tablet 29% 39% 41% 19% 15% 8% Wearable 6% 10% 8% 3% 0% 0% Bronto Software, 2016 www.mediacenteronline.com pg. 4 E-Commerce Consumer Insights According to King Retail Solutions’ Winter 2015 consumer survey, 67% of US adult smartphone owners had at least one shopping app on their phone. The results support the common knowledge that Millennials have the largest smartphone penetration, 83%, as well as the largest penetration of shopping apps. Smartphone Shopping Apps by Gender and Age Group, Winter 2015 Metric All Adults Men Women Millennials Gen Xers Baby Boomers No smartphone 24% 29% 20% 17% 23% 32% Smartphone, but no shopping apps 25% 25% 16% 22% 25% 29% 1 shopping app 14% 12% 18% 18% 12.5% 12% 2 shopping apps 14% 12% 19% 19% 13% 11% 3 shopping apps 9% 9% 12% 10% 10% 6.5% 4 shopping apps 4% 3% 4% 5% 4% 3% 5+ shopping apps 10% 10% 11% 9% 12.5% 6.5% King Retail Solutions, Winter 2015 The survey also Use of Shopping-Related Apps on Smartphones, Winter 2015 found that more of Baby Use All Adults Men Women Millennials Gen Xers the consumers in the Boomers categories above had Store shopping only 14% 12% 16% 12% 15% 17% an e-retailer app on their smartphone, with men Online shopping only 38% 43% 35% 40% 36% 39% the most at 51% and Both 47% 45% 49% 48% 49% 44% women the least at 37%. King Retail Solutions, Winter 2015 In addition, all categories of consumers said they Preference of Goods for “Buy Online/Pick Up In-Store” Option, Winter 2015 used the shopping- Fresh Prepared Demographic Apparel Electronics Groceries Housewares related app on their Meals phones both for All adults 57% 80% 28% 28% 59% shopping in a store as well as shopping online Men 47% 87% 27% 28% 58% than either individually. Women 64% 75% 28% 27% 60% Millennials 62% 80% 33% 31% 54% During the 12 months prior to the survey, 40% Generation Xers 63% 78% 28% 27% 64% of all adult participants Baby Boomers 42% 81% 19% 23% 60% said they used the “buy People with kids 60% 81% 27% 24% 64% online/pick up in-store” option, but it was even People without kids 55% 79% 28% 30% 56% higher among people Rural 61% 82% 26% 26% 55% with children, 48%; Urban 60% 80% 30% 30% 49% men, 45%; and Baby Suburban 54% 79% 27% 27% 65% Boomers, 45%. King Retail Solutions, Winter 2015 www.mediacenteronline.com pg. 5 Buying Fashion Online A Big Number for Back-to-School E-Commerce Sales As the last table on page 4 shows, all categories of eMarketer projects that total retail sales during the 2016 consumers were within a few percentage points in terms back-to-school season (July and August) will increase 2.6%, of their preference for buying apparel online and picking up or $828.81 billion from 2014’s $807.50 billion; however retail their orders in-store.
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