E-commerce spending continues to outpace analyst’s predictions. According a Forrester Research report, e-commerce spending will reach $259 billion in 2014, and $278.8 billion by 2015. Only a year ago, Forrester released its 2009 report, which predicted $248.7 billion spending in 2014, a 4% change in their current 2014 forecast.
The main reason for their forecast change, is the unbelievable year e-commerce had. In 2010 e-commerce grew 12.6% to $176 billion. The main driver of this growth is the increased confidence and convenience of online shopping. People are beginning to prefer shopping with online retailers to traditional brick and mortar. Not only this, but new innovations and trends with group buying, game consoles, and smartphone technology has helped push adoption of US online retail.
However, even though we may attribute e-commerce growth to adoption of technology, it may be linked to people simply, spending more while they are online, “70% of growth in US retail eCommerce sales came from existing shoppers spending more. Similarly, EU average online spend has increased 8% from 2010,” according to Patti Freeman with Forrester.
Retailers are getting smarter, optimizing their online storefronts to better understand their customers. For instance, free shipping is a somewhat new phenomenon that dramatically increases average order value, pulling from an Internet Retailer report, “Retailers are offsetting the margin loss from offering free shipping, because the average order value for transactions with free shipping are an average of 30% higher than those without.”
In terms of total US sales, the Internet still only accounted for 8% of total 2010 sales, beating the 2009 forecast of 7%. 8% may seem miniscule, but in 2009, online retail only accounted for 6% of total sales.
E-commerce is growing. People are becoming familiar and friendly with the idea of buying online, saving time and money. For brick and mortar businesses, it may be time to think about multi-channel strategies for sales.