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E-commerce sales surpassed 10% of total retail sales in 2019 for the first time

Published by Business Insider on Mon, 24 Feb 2020


This story was delivered to Business Insider Intelligence Payments & Commerce subscribers earlier this morning.To get this story plus others to your inbox each day, hours before they're published on Business Insider, click here.The US retail industry was estimated to have recorded almost $1.5 trillion in sales in Q4 2019, with e-commerce contributing over $187 billion, according to theUS Census Bureau.The overall industry's sales grew 4% year-over-year (YoY), a notable improvement from Q4 2018 when total retail grew just 3.4% annually. Meanwhile, e-commerce grew much faster in Q4 2019 and also bested its Q4 2018 results, posting a 16.4% YoY growth rate compared with the 10.8% YoY growth of the previous year.Q4 2018's performance was a steep deceleration from Q4 2017, when total retail sales surged by 5.1% YoY and e-commerce sales increased by 16.5% annually, so Q4 2019's return to acceleration is surely a positive sign for retailers.Here are three major takeaways based on the US retail industry's recently reported performance for Q4 2019 and 2019 overall.E-commerce cracked 10% of total retail sales in 2019, and its performance is still propelling the overall industry's growth.The segment accounted for approximately 11% of total retail sales in 2019, up from its previous high of 9.9% in 2018. And e-commerce sales grew 14.9% for the year, accelerating from its 13.6% increase a year ago, while total retail sales growth in 2018 actually decelerated from 4.7% in 2018 to 3.4% in 2019. Because merchants must embrace e-commerce to boost their own growth, the roles of solutions providers like BigCommerce and Shopify, as well as marketplaces like Amazon, could expand further in the coming years, due to their ability to help merchants without the resources to develop their own e-commerce platforms to begin selling online.The industry managed to elevate its performance in Q4 despite the short holiday schedule.There were six fewer days between Thanksgiving and Christmas in 2019 than there were in 2018, and since Thanksgiving canserveas a milestone that triggers holiday shopping, the abridged holiday season could have limited retailers' ability to rack up lucrative holiday sales. Merchants seem to have overcome this obstacle considering the industry's improved performance in the holiday quarter. Further, this season's success indicates that deploying tactics like offering sales earlyWalmartlaunchedits holiday deals in October this yearshould be implemented in years with longer holiday schedules too, in hopes of extending the holiday season and creating more sales opportunities.While e-commerce is a key growth driver for retailers, offline retail remains the largest sales opportunitymaking an omnichannel approach key to a merchant's success.Retail sales other than e-commerce made up 89% of 2019's sales, so brick-and-mortar retail remains the focal point of US retail. This is likely why e-tailers likeAmazonandseveraldigitalbrandsand payments companies likeStripehave been pushing into physical stores, since it gives them access to the channel and another way to attract volume. Since we are likely still decades away from e-commerce bringing in the majority of retail sales, sellers looking to maximize their performances should be working to sell both online and in-store in order to tap into e-commerce's growth and physical retail's size, while also developing offerings like click-and-collect to take advantage of the strengths of both channels.Want to read more stories like this one' Here's how to get access: Sign up forPayments & Commerce Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week. >> Get StartedCheck to see if you already have access to Business Insider Intelligence through your company, or inquire about access if you don't. >> Check If You Have Enterprise AccessExplore related topics in more depth. >> Visit Our Report StoreCurrent subscribers can log in to read the briefing here.Join the conversation about this story
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