Retailers hoping ecommerce would stall are going to be left holding the bag.
In 2011, I had a conversation with a burgeoning payments company about the trends of what people were buying with their smartphones. People might buy a movie ticket, the company said, but nobody was going to buy a fridge from their smartphone.
In 2017, people might buy the fridge. And a whole lot of other things too.
According to data from analytics firm comScore, the fourth quarter of 2016 was the first quarter when spending through digital commerce eclipsed $100 billion. The growth was spurred by an increase in people making purchases through digital channels of larger and more expensive items like jewelry, furniture, appliances and gaming consoles.
The fourth quarter of 2016 saw $109.3 billion in retail purchases made in the United States via either a desktop computer or a smartphone. Desktop browsers—which still make it easier to peruse items and enter payment and shipping information—dominate the overall spend on digital commerce with $86.6 billion in spending in Q4 2016.
But commerce spending through smartphones is beginning to rise. U.S. consumers spent $22.7 billion on commerce through mobile devise in the fourth quarter. The volume of dollars was the most ever for mobile commerce, about $5 billion more than the next closest quarter (Q1 2016). At 20.8%, mobile took its largest slice of commerce for any quarter in comScore’s data going back to Q1 2013.
For all of 2016, mobile commerce was up 47% compared to a 14% increase for desktop ecommerce.
Diversifying The Ecommerce Opportunity
As digital commerce has risen through the years, the most purchased items have tended towards technological fare. Computer hardware has been the top product category for digital commerce over the years, most likely as a self-fulfilling cycle of the mobile revolution itself (people buy computers and gadgets in order to buy more computers and gadgets).
As smartphone adoption has become saturated in the United States, people are now more comfortable using their pocket computers to make more everyday, mundane purchases.
Apparel and accessories is now firmly the biggest digital commerce channel, overtaking computers and hardware in every quarter since Q4 2015 (with the exception of Q3 2016, which happens to be when the new iPhone was released).
The largest growth rates for digital commerce categories came in categories historically dominated by brick and mortar retailers. Jewelry and watches had the highest ecommerce growth rate in the U.S. in 2016 at 39%, followed by furniture, appliance and equipment at 26%. Video games, consoles and accessories (like headphones or controllers) grew 24%, as did flowers, greeting cards and gifts, event tickets and computer software.
Towards the bottom of digital commerce growth rates we find media, which has already gone through the painful process of transitioning to primary digital sales channels. Books and magazines saw a 14% ecommerce growth rate while digital content and subscriptions grew 15%. Computers and hardware (15%) and consumer electronics (16%) continue to grow in ecommerce but have mostly already become saturated in digital sales channels.
The Growing Percentage Of Digital Commerce
Retailers have had trouble over the years quantifying the precise toll that the rise of ecommerce has had on brick and mortar locations. Retailers know that digital channels have cut into the margins, but precisely how much has been a frequent question.
The consensus is that ecommerce represents somewhere between 12% and 19% of total retail sales on an ongoing basis. When we are talking about billions of dollars in transactions, those percentages matter. Especially in the decision making process for how a retailer will address sales channels and strategies.
Retailers that have heavy investments in physical presences tend to cite studies at the lower range. More pure ecommerce players will cite the higher range.
Per comScore’s numbers, consumer’s share of discretionary spending (dollars spent on non-essential items such as durable goods, apparel, entertainment, leisure etc.) through digital channels reached 17% in Q4 2016. The analytics firm says that mobile devices are the cause of a mild acceleration in discretionary spending through digital. Overall, digital spending grew 19% in 2016.