Keeping Pace with E-commerce Acceleration
Exporters need to move fast and deliver more efficiently to keep up with the e-commerce boom in the United States.
Online shoppers want more control over the timing of deliveries and a convenient returns process.
E-commerce has been taking an ever larger slice of the retail pie in the United States since the turn of the Century and all indicators show this trend is likely to continue. Exporters wanting a piece of the action need to have the best logistics solutions in place or risk customer dissatisfaction.
E-commerce sales in the United States have steadily increased since 1999, reaching $69.2-billion in the fourth quarter of 2013.
E-commerce percentage of total US fourth quarter retail sales 1999-2013
The growth in e-commerce is expected to continue for the next three years. Mintel Group’s forecast, which is based on the U.S. Census Bureau statistics, predicts e-commerce sales in the United States could reach $574.2-billion by 2017. The per capita spend is expected to be $1,759, representing 2.86% of GDP. Forrester Research’s projected sales for 2017 are a more modest $370-billion.
Forbes reported that the forecasted growth in e-commerce could be attributed to bricks-and-mortar retailers investing in their e-commerce divisions. Larger retailers were expanding click-and-collect sales, which allow customers to order online and pick their purchases up at the store. Another influence on the bullish outlook for e-commerce is the continued growth in smartphones and tablets, which means more people are spending more time online comparing products and prices.
E-commerce accounts for approximately 5.2% of total retail sales in the US in 2012, according to statistics released by the US Census Bureau. Though statistics were not available for certain categories of consumer goods, the highest proportion of e-commerce sales were by motor vehicle and parts dealers and sporting goods, hobby, book and music stores.
United States Retail Trade 2012 (US$-millions)
|Motor vehicles and parts dealers||894,798||23,244||2.6|
|Furniture and home furnishings stores||94,898||488||0.5|
|Electronics and appliance stores||102,998||not available|
|Building materials and garden equipment and supplies stores||294,656||not available|
|Food and beverage stores||631,486||900||0.1|
|Health and personal care stores||275,645||not available|
|Clothing and clothing accessories stores||241,386||2,843||1.2|
|Sporting goods, hobby, book, and music stores||85,190||1,851||2.2|
|General merchandise stores||649,754||not available|
|Miscellaneous store retailers||112,966||2,179||1.9|
|Non-store retailers (incl. electronic shopping and mail order)||408,475||192,619||47.2|
|Total Retail Trade||4,344,140||226,878||5.2|
Source: U.S. Census Bureau
Clothing, clothing accessories and footwear made up 17% of the $1.9-billion sales of e-commerce only stores in the United States in 2012. Electronics and appliances had 12% market share, followed by furniture and home furnishings and drugs, health aids and beauty aids. The U.S. Census Bureau statistics for 2012 show ‘other merchandise’, which includes jewellery, auto parts and souvenirs, making up 15% of total sales.
E-commerce Only Stores Sales 2012 (US$-millions)
|Books and magazines||9,433|
|Clothing and clothing accessories (includes footwear)||33,023|
|Drugs, health aids, and beauty aids||14,684|
|Electronics and appliances||22,500|
|Food, beer, and wine||4,729|
|Furniture and home furnishings||15,881|
|Music and videos||9,290|
|Office equipment and supplies||6,634|
|Toys, hobby goods, and games||5,853|
|Other merchandise (includes jewellery, auto parts, and souvenirs)||29,734|
|Non-merchandise receipts (includes commissions, shipping, and advertising)||15,930|
Source: U.S. Census Bureau
Online retailers may need to hold inventory in the United States so that it’s closer to customers and shipping times are reduced. This means large quantities can be sent direct from point of manufacture by freight in order to reduce shipping costs and simplify customs. As the inventory is held closer to customers, delivery can take place soon after order. Prices can also be offered to customers in US Dollars.
UPS’s 2014 Pulse of the Online Shopper Survey, which was conducted by comScore, collected data from 3,000 American consumers about their online shopping habits. All of the shoppers made at least two online purchases in a typical three-month period. The survey found that while overall satisfaction with online shopping was high, shoppers were less satisfied with flexibility to choose delivery dates and times, the ability to re-route purchases, and green shipping options.
ComScore also surveyed 5,800 consumers around the world about their online shopping experience. The results are also typical of online shoppers in the United States. Respondents said they want more options in searching for items, checking out, enhanced security and alternate delivery locations. Key take-aways from the research include:
- 55% of shoppers prefer to buy online
- Over 50% of consumers ship to store at some point
- Only 44% of shoppers are satisfied with the post-shipment flexibility to choose another delivery date, while only 43% are content with the ability to re-route a package
- Only half of consumers are satisfied with the ease of making a return and the clarity of retailers’ policies
Smartphones play a big role in the online experience, reflecting the ‘omni-channel’ trend in retailing where shoppers use different channels to interact with brands. Online shoppers who use multiple devices said they would prefer to shop on a desktop computer over mobile because larger and clearer images help them comparison shop. Therefore, it’s no surprise that when shopping on mobile devices, 41% of respondents said they prefer a retailer’s full website vs. a mobile website (34%) or mobile app (25%).
While retailers have had a hard time connecting social media to sales, the study clearly shows that it does have an impact as one-third of all shoppers and one-half of Millennials said purchase decisions are influenced by social media. Consumers also are likely to share their opinions on product and brands on social media. Satisfied shoppers who share their thoughts via social media are most likely to post on Facebook (86%) followed by Twitter (34%), Google + (23%), Pinterest (21%), and Instagram (19%).
The demand for cross-channel convenience is becoming more prevalent for the savvy shopper. In fact, 40% of purchases are made crossing channels, whether searching in store and purchasing online or vice versa. “The retailers who embrace the various channels and options that customers favour will deliver a positive customer experience and ultimately drive sales and brand loyalty,” said Susan Engleson, senior director at comScore.
Speed and Cost of Deliveries
Free shipping continues to drive purchasing decisions – 58% have added items to their shopping carts to qualify for free shipping and 83% are willing to wait an additional two days for delivery if shipping is free. More than one-half of online shoppers said they want to see the total purchase cost early in the checkout process, and the majority prefer seeing the expected arrival date rather than the number of days it will take for the product to arrive.
While consumers prefer most of their packages delivered to their home (74%), there is a growing trend for alternate delivery options. Only about 43% of shoppers in the survey were satisfied with the flexibility of changing delivery days or rerouting packages.
Consumers now expect free returns with 82% respondents saying they would complete the purchase if they could return the item to a store or have free return shipping, and 66% said they view a retailer’s returns policy before making a purchase. The majority of shoppers want retailers to make it easy for them to return a purchase by including a label in the box.