Beyond Prime: The Last Five Years of eCommerce and Retail
Do you remember early in the year when Zoom boomed and it seemed like everyone from your 4-year-old son to your 84-year-old gran hopped on video calls and had virtual family get-togethers?
It really highlighted the magnitude of change that we’ve had to adapt to no matter how old or young. Many schools remain online and many workers remain spreadsheeting and typing in their living rooms.
Holidays, too, have not escaped the digitizing effects of the pandemic and waves of lockdowns. Independence Day and Labor Day passed by rather quietly than usual; Prime Day was forecast to bring in $10 billion over the two-day sales spree; while this holiday season is set for crowds to be gathered mostly virtually.
What I’m trying to highlight is that the world seems like all digital all the time; all ecommerce all the time.
But ecommerce has been growing steadily and not-so-silently for years now, particularly in the last half a decade. Let’s take a look at some of the most pertinent ways in which ecommerce has been transforming retail.
A growing digital appetite
In 2016, which was Prime Day’s second birthday, sales reached $1.5 billion, which was quite healthy for the times. Hitting the $10 billion mark is a barometer for the long distance ecommerce has travelled in such a short period.
That’s because each year ecommerce has been eating up more and more of the retail sales pie, with the pandemic making its share seem like the difference between eating a McSalad and a Big Mac.
Five years ago, ecommerce’s share of total retail sales hit 7.2%; one year later 8.2%; the following year 9.1%; and then 9.8%; and last year registered 14.4%. And then this year, an exceptional year so far; an unprecedented and unpredictable year that has reshaped so much of our lives, ecommerce is set to reach 14.4% of total retail sales.
The rich are getting richer
A second theme of the last five years is that the top ecommerce players at the table are set to take home just over 63% of all online sales in the US at the end of 2020. Last year they took home just north of 57%.
Yet among the decagon table, the player that takes home the biggest chips is Amazon, which is forecast to reach 39%; Walmart is set to nudge eBay into second place, with 5.8% of the share by the end of 2020.
The rise of ecommerce has squeezed retailers in terms of space, forcing a rethink and transformation of how they utilize their stores. In the last half a decade there have been more retail store closures than openings. In 2018 there were just under 2,000 closures; last year there were 5,143 closures. This year we have seen an unprecedented amount of closures, including some of the biggest and most well known.
For brands and retailers, downsizing has also coincided with rethinking the space which they have, from a bland place to store products to designing their spaces for destinations, for experiences.
The expanding warehouse
Finally, as ecommerce expands, there is an increasing necessity for bigger space to store such goods. There is greater need for warehouse space and fulfillment centers that seem to be growing at the same time as stores are becoming smaller. In fact, industrial square footage has expanded 9.4% since half a decade ago.
These are trends that have pre-dated the pandemic and the weird year 2020 has become. Yet for the last seven months, the pandemic and rolling lockdowns have accelerated these trends – key indicators for brands and retailers to take note of, and adapt their ecommerce operations, no matter which ecommerce platform they host their websites on – whether it be a pricey-yet-priceless, best-in-class platform like Salesforce Commerce Cloud, or a nimble, cheap, and popular platform like Shopify or WooCommerce.
PS: ArganoUV is one of the world’s leading Salesforce Commerce Cloud specialists. Contact us to see how we can work together.