In this article, we will look at the explosive growth of online retail and the latest results from the September retail sales report. As you can see from the chart below, non-store retailers, which are online stores, have grown to 11.41% of total retail sales.
Source: Bloomberg
Many younger Americans are probably surprised at how low that percentage is because they shop for most things online. Retail stores have become showrooms where consumers try out products and then go online to find the best price.
The market share gains of online retail have come primarily at the expense of department stores. The most obvious example of this change is the bankruptcy of Sears, while Amazon reaches nearly a $1 trillion market cap. Amazon is now opening stores with highly rated products, bookstores, and owns Whole Foods. Even the biggest online sales firm sees the need for stores.
The definition of what a store is has changed. Physical stores are utilized for returns, picking up items bought online, asking questions about the product, and testing products in person. The most successful physical retailer in terms of sales per square foot is Apple. The stores are oriented towards consumers testing products in person and employees solving customers’ problems. Physical stores aren’t dead; they simply have morphed. A previous metric we reviewed, retails sales per capita tells the real story about physical stores.
Online Sales In Each Country
It’s interesting to look at online sales in each country to see which countries are the furthest along the growth trajectory. It’s also interesting to see where growth can go by reviewing the top countries. Countries need decent infrastructure, wealthy consumers, and proliferation of high-speed internet to have a high percentage of their retail sales online.
The chart below reviews 2018 estimates for online sales as a percentage of total gross revenue.
