E‑Commerce Sales to Continue Rapid Growth, Top $327B by 2016

E‑commerce sales continue to grow rapidly, having topped $200 billion in 2011.  As consumers transfer their shopping habits to mobile devices and e‑commerce Web sites, retail businesses must adapt their business models to one of the most profound transitions ever for the industry.  Forrester Research expects that online sales will grow from 7% of overall retail sales to close to 9% by 2016. 

Key drivers of the continued growth in online sales include consumers' greater comfort level with purchasing various categories online, broader web shopping capabilities with mobile and tablet devices, innovative new shopping models that divert spend away from physical stores (e.g., flash sales, subscription models), online loyalty programs, and aggressive promotional offers from web retailers.

A recent analysis from Forrester Research, “U.S. Online Retail Forecast, 2011 to 2016," predicts consumer will spend $327 billion online annually by 2016.  Where should business development executives and merchandising managers focus their attention?  Following are five trends that will drive e‑commerce strategy:

1. Higher percentage of sales from existing online shoppers. While new shoppers are driving increases in e‑commerce activities, existing ones are actually more of a factor. Forrester predicts that the average shopper will spend $1,738 annually by 2016, compared with $1,207 in 2011. So, it is imperative that retailers consider technologie, Website design principles and incentives that encourage people to fill their online shopping carts with more items.

2. Fourth quarter remains dominant cyber-​season. More than 70% of the shoppers who purchased items online during the fourth quarter of 2011 said that they did so because of deals and promotions, Forrester reported. In November and December 2011, e‑commerce accounted for about 15% of overall holiday sales, which is a much higher percentage than during other times of the year.

3. Keep an eye out for flash sales sites. Forrester calls out sites such as Gift Groupe and Woot, which offer what we used to call “fire sales” in real world retail. These are sales where the prices keep dropping, as long as merchandise lasts.

4. Online loyalty programs are more of a factor. Forrester reported that in 2010, about 9% of shoppers belong to new frequent buyer programs from the likes of e‑commerce forces such as Amazon​.com or Williams-​Sonoma. In 2011, about 12% of online shoppers were members of such clubs.

5. The tablet is driving mobile shopping. The smartphone is extremely important for when shoppers are in stores, but the tablet is more likely to be used for researching and for browsing products online. (70% of surveyed tablets users do this versus 47% of smartphone users.) In addition, shoppers were more likely to “place an order for physical goods” using a tablet than a smartphone (47% percent of tablet users versus 17% of smartphone users).

[Source:  “U.S. Online Retail Forecast, 2011 to 2016.?  Forrester Research.  27 Feb. 2012.  Web.  29 Mar. 2012; Clancy, Heather.  "Five Trends That Will Drive Ecommerce Strategy."  Smartplanet.  26 Mar. 2012.  Web.  29 Mar. 2012.]