Obviously, doing the job I do - and writing books on the subject - I track the industry quite closely.
One thing that has interested be for a while is the impact of 'online' on retailing. In the early days
online represented only a small percentage of overall sales - mostly in niche markets. However, for a
whole multitude of reasons - not least that more users now have broadband - online is moving into the
wider context of retail sales.
What prompted me to write this article was the that in the summer of 2008 statistics were coming out suggesting that
online was getting close to representing 20% of all retail sales. This was significant in that many commentators
suggest that 20% represents the 'tipping point' in the industry. In other words, when online equals one fifth of sales
then all retailers - and as I write this in October 2008, many still doubt the potential of the Internet -
will move resources online. This, in turn, will increase online sales and so move that 20% figure still higher.
The problem I have is where these figures come from. Here are my comments on the subject taken from my book,
Internet Marketing - a Practical Approach:
'Before considering the role of the Internet in any retail strategy, let's consider its impact so far. Throughout this
book I have attempted to present fact and figures that are both relevant and accurate. However, for this particular
subject the data is complex or biased, resulting in it being confusing - or all of these. The complexity comes from
different bodies' interpretation of what 'retail' is within their research. For example, some include services
such as online booking of holidays or flights whilst others include only of tangible products. This has an obvious
impact in that just one family trip booked online would be the equivalent of dozen, if not hundreds, of books or CDs.
Also, do downloads of music and games count as online retail sales - and what about Internet gambling? Other
statistics, such as those from the UK's Office for National Statistics (ONS), include 'online' with other 'non-store'
retail figures. The problem itself is made more difficult by the researchers not always publishing their
own definition of what they have counted as retail. Bias comes in the form of research published by organizations
that are in some way involved in - or would gain from - online retailing, and so may have a natural inclination
to be positive about any numbers involved'
Also from the book are the following statistics:
- US government figures that suggest online represents only three per cent of total retail sales
- The British Retail Consortium (BRC) saying that online sales for 2007 were six per cent of all retail sales
- A 2008 report released by Shop.org suggesting that e-commerce would account for 7% of all retail sales in that year
- The Interactive Media in Retail Group (IMRG - the industry body for the e-retail industry) and Capgemini put the 2008 figure at 17 per cent
This web page is here to help keep this section of my book - and the issue of 'what is online retail' - up-to-date.
to celebrate 35 years of trading UK retailer Argos said that the Internet accounted for 21% of
sales. Now if one of the pioneers of multi-channel retailing has 21% of sales, surely 17% of ALL retail sales seems
a bit on the optimistic side? Perhaps UK retailer John Lewis' 12% of total sales is more feasible? [quoted in an
with Luke Kingsnorth, Development Manager, Online Marketing].
Forrester Research retail analyst Sucharita Mulpuru (quoted on stores.org) refers to 'non-travel-related online sales'
when talking about online sales. This is relevant in that Forrester is a key player in industry and market research
and analysis. More specific is research published by Verdict Research, who present the components of 'online retail spending' as:
books, clothing & footware, DIy & gardening, electricals, food & grocery, furniture & floorcoverings, health & beauty, homewares, music & video and other markets.
The IMRG Capgemini Index [www.imrg.org] tracks 'online sales', which it define as 'transactions completed fully,
including payment, via interactive channels' from any location, including in-store. These sales are predominantly
internet-based today, but the Index remains ready to record e-retail sales conducted via whatever interactive
channels the market may embrace in the future. [AC's comment on this : But what if a customer goes into their
local travel agent and books a flight on easyJet whilst on those premises, the
agent will make the booking online. Does this count as an online sale?]
April 2009. Having recently seen an article quoting 'Internet shopping' representing 3.4% of total retail sales
in the The Retail Sales Index [RSI - this is for the UK], I thought I would go directly to the government department that compiles these statistics and
ask 'what is counted as Internet sales in the RSI?'. The good folk at the Office for National Statistics were [fairly] quick to respond
to my enquiry, pointing me at a document that include the following:
'The RSI covers sales only from businesses registered as retailers according to the
Standard Industrial Classification (SIC), an internationally agreed convention for
classifying industries. The retail sector is division 52 of the SIC 2003 and retailing is
defined as the sale of goods to the general public for household consumption.
Consequently the RSI includes all internet businesses whose primary function is
retailing and also covers internet sales by other British retailers, such as online sales
by supermarkets, department stores and catalogue companies. This means that the
RSI covers three of the main types of household internet spending
a) spending on goods from specialist internet retailers
b) spending on goods from store-based retailers
c) spending on goods from catalogue-based mail order retailers'.
But importantly ...
'The RSI does not cover household spending on services bought from the retail
sector as it is designed to only cover goods ... on-line sales of services by retailers, such as car insurance, would also be excluded'.
So there we have it. As I suspected,
services are not counted in 'official' figures, but - it would seem - they are included in the likes of the IMRG figures.
Which do we take notice of? As an e-marketer, I would use the bigger numbers - but I would say that wouldn't I? Whilst I appreciate that
the SIC has a role to play in segmenting industries, I think that if a person-in-the-street [ie not a B2B transaction] pays for something
on a website then that is online retailing - or is it
November 2009. I forgot all about cars! See
Online Reaches Parity for Used-Car Shopping.
It would also seem that I am not the only one intrigued by conflicting reports related to online retailing. This one -
E-Commerce Health Is in the Eye of the Beholder
- questions the methods of research.
May 2010. Mothercare announces that online is now worth more than 20% of its UK business. Note,
however, that this includes orders placed online from within their stores. Kind of blurs the boundaries
of e-tailing a little - but is a definate vote for multi-channel retailing.
January 2011. For a whole host of offline reasons, Christmas 2010 saw online sales reach a new
peak. Here's the data from the USA;
Online Holiday Spending Sets Record
and the UK;
Christmas shoppers spent GBP2.8bn online.
Also out at the same time was this report:
2 in 3 Web Users Pay for Content.
It includes a list of digital products bought online, some of which I had missed in my comments above.
For example; music, software, videos/movies/TV shows, ringtones, mobile phone apps,
newspaper, magazine/journal articles/reports, photos, games and, as e-readers become more common, e-books
should all be counted as retail sales, I wonder if they all appear in the various statistics?
September 2012. Perhaps
Waitrose looks to take 6% of sales over the internet
makes the 'what is online retail sales' issue a little clearer. Or maybe not?
January 2013. Online sales was a big issue over the Christmas of 2012,
More than 10% of Halfords sales now made online
is just one story which helps give a realistic view of the subject of this musing.
So popular are online sales that I don't think it is
worth continuing this thread after this date - though what is included in the measuerement
of 'online sales' is still an issue.
February 2017. OK, so I said I wasn't going to bother updating this page - but it is consistantly in the 'top 5 most visited' pages
of this website ... so someone's finding it interestinguseful. That being the case - from time to time - I'll add anything interesting
that I come across. Starting with ...
I came across statistics today that I thought was relevant.
The US Census Bureau announced that U.S. retail e-commerce sales for 2016 represented 8.1% of US retail sales. Yep, that's a shade over
eight percent. Hmmmmm. Note however, this does not include food, travel services and ticket sales - but still, 8.1%, that's really low.
See the report on
US Census Bureau News .
The numbers for other parts of the world are equally unimpressive:
Asia Pacific - 12.1%
Western Europe 8.3% - don't forget the UK is 20%+ ... so there are countries that are well under 8.3 for that to be the average
Central and Eastern Europe 3.4%
Latin America 1.9%
Middle and East Africa 1.8%
[Source: online buyers in selected countries ].
Statistics are sketchy, but China seems to be at around 20%. The averages on that make the figure significant as only around half of all
Chinese are online [Source: Internet World Stats ].
February 2018. I'm sorry but I can't put my hands on the source, but it would seem that online sales in the USA have jumped
up to around 8.5%. But ... and it is a big but - half of those sales are on Amazon. Doesn't say too much for every other shop in America does it?
That said, of course, 8.5% of a massive number is still a pretty massive number. Actually, 8.5% of total sales is around 409 million dollars.
December 2018. Although it is not on exactly the same subject as this page,
The Top 5 Most Popular Categories Purchased Online
adds to the issues raised earlier.
That sweater you don't like is a trillion-dollar problem for retailers
raises another issue as it purports that around 15 to 40 per cent of online purchases are returned. So, when online sales numbers
are quoted, is that gross sales or net sales after returns are deducted? Even if the actual returns figure is at the lower end of this proposal,
that brings the real sales figures down a significant amount.
How to cite this article:
Charlesworth, A. (2008). Online retailing - what is it, and how important is it?. Retrieved [insert date] from AlanCharlesworth.com: