Are E-commerce Sales Really So Good?

Retail

Published: February 8, 2013 6:00 am

Research firm comScore reported about 2012 that:

For the full year, U.S. retail e-commerce sales reached $186.2 billion, an increase of 15 percent — the strongest annual growth rate since before the recession. Q4 2012 sales grew 14 percent year-over-year to $56.8 billion, marking the first ever $50 billion quarter. It also represents the thirteenth consecutive quarter of positive year-over-year growth and ninth consecutive quarter of double-digit growth.

As an aside, it is worth noting that Amazon.com Inc.’s (NASDAQ: AMZN) sales for the past full year were $51.7 billion, up 23%, which colors the national numbers in a way that makes e-commerce sales outside Amazon less positive.

Even without the Amazon-effect, e-commerce has been less successful than many people suppose. Sales per quarter in 2007 averaged $30 billion and grew at a rate of more than 20%. The average sales by quarter in 2012 were about $48 billion on average. The positive change is only 60% over the five years, which is hardly a torrid pace.

E-commerce is supposed to be the salvation of the retail industry, although the salvation has been uneven. Experts says that companies such as Best Buy Co. Inc. (NYSE: BBY) and Barnes & Noble Inc. (NYSE: BKS) have been ruined. Online sales have augmented the advance of other retailers, including Wal-Mart Stores Inc. (NYSE: WMT) and Apple Inc. (NASDAQ: AAPL).

E-c0mmerce sales improvement actually may slow considerably in the years ahead. Among the reasons are that bricks-and-mortar retailers have learned the tricks of price matching and free overnight delivery. These retailers always will retain the benefit that some people want to see and feel what they buy before they buy it.

The other enemy of e-commerce is that its success has been so uneven. For every Amazon there is a Best Buy, or worse, a J.C. Penney Co. Inc. (NYSE: JCP) where online sales are actually shrinking. The future of e-commerce can be seen in both its victories and its mediocre, or failed, results.

E-commerce may have been the “next big thing” for a while. It future will be much more mixed.

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