And while the brick-and-mortar accounts for an overwhelming majority of these sales, the segment is only expected to experience modest growth, at a CAGR of 1.32% from 2015-2020.
Online retail, on the other hand, is booming. Online retail in the US is expected to grow at a CAGR of 13.7% during the same time period. In 2015, the US accounted for more than a quarter of all global online retail revenue, with Americans spending a collective $343.6 billion online. This number is expected to reach $721.5 billion by 2020.
It’s not hard to see why more Americans are taking to the internet to make purchases. People are constantly being bombarded by online-only deals and promotions, and free shipping, as well as hassle-free returns, make it all too easy to get everything you need (and a lot of stuff you don’t) online.
Additionally, because of the ubiquity of smartphones, there aren’t many barriers to the average American making online purchases. All you need is a credit card (or a PayPal account) and an internet connection. And with less and less spare time on our hands, clicking ‘add to cart’ can be a whole lot easier than going to a physical store.
Online-only brands and omni-channel retailing are big trends in online retail
To drive customers online, some major retailers are even offering online-only brands. Target is one such retailer, with six exclusively online brands not available in physical stores.
This is also a technique used by companies to try out a product before it hits physical stores. Selling these brands online is more cost-effective, as no floor space is required in retail stores.
Online shopping has also opened the door to omni-channel. This offers consumers the option to shop online and pick up the merchandise in-store.
Best Buy, for example, is integrating its offline and online stores to boost revenues. As part of its omni-channel strategy, the retailer is utilizing physical stores as distribution centers for online purchases.
Perhaps unsurprisingly, Amazon, Apple, Sears, Staples, and Walmart are currently the top vendors in the online retail market in the US. But, unfettered by physical space, online retail is home to a huge number of vendors. It is an intensely competitive space, but this competition will keep the market growing—and keep people shopping—over the projected period.
