When it comes to online shopping vs. in store shopping, brick and mortar retail is experiencing a wave of disruption.
Ecommerce is growing 3x faster than traditional retail. Overall, 51% of consumers prefer to shop online, while 49% would rather go to a store.
To many onlookers, the wave looks like it may send brick and mortar into a tailspin, maybe even a panic, maybe even an endgame. When it comes to online shopping vs. traditional shopping, the marketplace is undergoing a transfiguration the extent of which we haven’t witnessed until now.
2017 was the worst year on record for traditional retail, a year in which stores announced more than 6,700 closures. By the end of 2017, that number came to 6,985. This is a trend that will continue through 2018 as online retailers keep chipping away at the brick and mortar storefront. As the top e-retailer, Amazon is leading the online charge that shows no signs of letting up.
In the future will malls be nothing but ghost towns? What do people buy online? Let’s see what the statistics on online shopping vs in store shopping tell us.
Statistics on Online Shopping vs In-Store Shopping
If you ask who’s winning in the online shopping vs. in store shopping battle, the answer very well may be it depends on how you look at it. Entrepreneur reports that traditional merchants sell 10 times more than e-commerce shops. The following stats show that brick and mortar stores are holding out, but e-commerce is gaining fast:
- Overall, some 51 percent of Americans prefer to shop online, while the remaining 49 percent would rather go to a store
- E-commerce is growing 3 times faster than traditional retail, with a growth rate of about 15 percent compared to 5 percent growth for brick and mortar stores
- In the US, customers make an average of 19 purchases online per year, the second most in the world behind Asia
- However, people spend 64 percent of their shopping cash in stores, compared with 36 percent online
It’s reasonable to ask whether there are certain products that are really driving the increase in online sales. Let’s find what people are buying online.
What Do People Buy Online?
In 2017, Amazon accounted for 44 percent of US e-commerce sales. So, in order to drill down on what people buy online, let’s first look at Amazon’s top-selling products by category:
- Consumer electronics racked up $8.5 billion in sales
- People spent $5.5 billion on home and kitchen items, which have seen a 20 percent growth rate in sales since 2016
- Books and other items in the publishing sector registered $5 billion in sales
- Sports and outdoors equipment registered $4 billion
Interestingly, while Amazon dominates in electronics sales, Marketing Charts reports that clothing is the number one selling e-commerce category overall, with $20.3 billion in sales. In terms of growth, sales of jewelry and watches grew by 39 percent, which was far ahead of the next fastest growing category, furniture, sales of which grew by 26 percent. Next, sales of video games, including consoles and accessories, grew by 24 percent. Surprisingly, sales of flowers and gifts grew by 24 percent as well.
What Do People Buy In Person?
To determine what people are buying in stores, Imprint Plus conducted a survey of 1,000 people. Here’s a rundown of some of the findings:
- 86 percent of people surveyed prefer to buy food in-store so they can judge for quality and freshness
- 60 percent of the survey participants prefer to buy clothing in stores
Yet, clothing is the number one selling e-commerce category overall. This indicates that clothing is a good omnichannel category, one that, depending on current fashion, will sell well both online and off.
Food dominates the in-store sector. To corroborate this, Nielsen’s Total Consumer Report from 2017 reveals the following:
- People spent $48.7 billion on produce, which saw a 2.3 percent growth rate from 2016, second only to deli products
- Deli grossed $25 billion, with a 2.6 percent growth rate
- People spent $251.2 billion on groceries (all food items besides fresh perishables), but that category only saw a .2 percent growth rate
- Healthcare products saw the highest growth rate overall, at 3.2 percent (total sales: $43.5 billion)
Nielsen also found that fresh organic produce, meat, and “deli-prepared beverages” (smoothies) were in the top ten in terms of sales and growth rate, with packaged salads leading the way at a healthy $900 billion. There’s no doubt Amazon looked at these numbers when it decided to purchase Whole Foods in 2017.
Who Shops Online the Most?
As you would expect, millennials, the generation most immersed in the internet, prefers to shop online the most. Here are some findings from Shopping.fm on who shops online the most:
- 67 percent of American millennials prefer shopping online, and millennials make an average of 16 e-commerce purchases per year
- 56 percent of America “Gen Xers” prefer shopping online, and they make an average of 19 e-commerce purchases per year (a number that reflects how much more money they make per year than millennials, as well as how many much bigger their households are)
- Baby boomers made an average of 15 online purchase per year
Millennials and Gen Xers are leading the way in the e-commerce and online grocery shopping trend. Since millennials prefer online shopping, and are the largest generation of consumers besides baby boomers, expect e-commerce to grow even more popular as millennials gain more buying power.
What about B2B shoppers?
- Electronics supply is the leading B2B industry, accounting for 54.1% of all US manufacturing, distributor, and wholesales sales.
- B2B eCommerce sales grew 20x faster than total US manufacturing sales, amounting to $430 billion.
- US B2B eCommerce grew 9x faster compared to total manufacturing, distribution, and wholesale sales.
Global B2B sales continue to rise, and a solid growth rate is expected to propel the worldwide industry into tens of trillions of US dollars. The main drivers of this trend include B2B buyers increasingly turning to online channels and B2B eCommerce marketplaces such as China's Alibaba and Amazon Business in the US. Unsurprisingly, these are also two of the largest B2B eCommerce markets in the world.
Why Brick and Mortar Retail Isn’t Doomed
Even though online shopping is gaining popularity, there will still be a demand for brick and mortar locations in the future.
When it comes to reasons why people don’t want to shop online, 34 percent say it takes too long to deliver their purchases, and 25 percent don’t like paying high shipping fees. E-commerce is still reliant on opening warehouses and concentrating popular products in distribution centers close to shoppers. In other words, online retailers may be changing the checkout process, but logistics and customer satisfaction are still major hurdles.
In traditional retail, suppliers are able to ship truckloads of almost anything quickly and conveniently. They are able to use warehouses as retail centers as well as fulfillment centers supporting online stores. It’s also easier than ever to ship loads that are less than an entire truckload (LTL freight) to retailer centers. Suppliers of all sizes can get free freight quotes and choose the best shipping option so that goods make it to stores quickly and at a minimal cost to the supplier. All this means stores can be fully stocked with items on hand for immediate purchase, whether shoppers are online or in person.
Furthermore, 56 percent of people want to see and touch things before they buy them. This applies particularly to food and clothing. For clothing, 55 percent of people want to try items on before they buy them. For food, 78 percent of adults regularly shop at grocery stores, and in-store food sales have grown by $16 billion, while online food sales have only grown by $1.6 billion. When it comes to the staples people really need, such as food and clothing, there will always be a place for brick and mortar retail.