Monthly Archives: March 2015

The E-Commerce Reality

By Mike Eckert

shopping-cart

Much fanfare surrounded the US Commerce Department’s February 17th release of US E-Commerce sales when it was reported they hit $300 billion for 2014. The media seems to have selectively highlighted the e-commerce figures.

You would be surprised if you asked anyone what the split between sales transacted online versus at a physical store. You may get responses that range from 20% to 50% for online sales. Those estimates are quite different from the reality.

Take away the headline and you get a different picture.

E-Commerce sales made up 6.5% of overall $4.695 trillion in retail sales in 2014. That’s right 6.5%. That leaves 93.5% or approximately $4.389 trillion transacted at the point of purchase. Even if you exclude auto and gas sales, e-commerce accounted for only 8.3% of adjusted retail sales.

E-Commerce sales have been growing at an annual rate of 15% over the last five years and overall retail sales rising 3.8%.  With many companies investing money and resources behind their e-commerce programs, are we overlooking the opportunities that exist with investing in the $4.389 trillion brick and mortar channel? Is the novelty of e-commerce a driving factor in how retailers are doing business and are we missing the bigger picture?

A new study by Forrester Research expects online sales to hit $414 billion by 2018, still a mere 11% of overall retail sales.

The real story is how brick and mortar stores are responding. Many say any offset with e-commerce sales will be met by increased revenue at bricks and mortar through innovative designs and technology to engage customers, enhanced customer engagement, retail environment, and a complete “shopping experience”.

E-commerce will only continue to force these brick and mortar stores to change for the better and make the “experience” a key selling point. Something you can’t find shopping online.

But rather than looking at it as an either or situation, where one’s win is the other’s loss, how are the two channels going to work in tandem and build on each other’s strength to satisfy consumers.

Mike Eckert is President of Design Phase Inc., a leader in the point-of-purchase industry. With over 30 years in the industry, Design Phase’s innovative displays for some of the world’s largest brands including Microsoft, LG Electronics, Disney, and Bose have won a multitude of awards, including Display of the Year four times.