This is why you should likely be spending at least 50% of your time on eCommerce
Everyone knows that eCommerce is the growth engine of retail leading to a momentous secular shift we haven’t seen the emergence of supercenters and other big box stores in the 90s. Yet given the huge growth rates and consistent above-plan sales trends, we don’t think many companies are keeping pace with the opportunity or allocating enough resources to the rapid paradigm shift unfolding before our eyes.
The most advanced companies we study are spending over 50% of their capital in eCommerce (think Nordstrom), placing entire leadership teams around digital (think Starbucks), and building new supply chains to get ahead and move faster for the sake of customer demand around convenience and speed (more important .com drivers than price). And even they would say it’s hard to get ahead and stay ahead despite the over-investment of financial and human capital.
eCommerce now represents 10% of US retail sales with overall growth rates in the mid-teens. This means that eCommerce generates over a point of total US retail growth, which we estimate is contributing +50% of the overall end market growth over the last 12 months. Certain corners of eCommerce are growing even faster in the 20-30% range, starting with Amazon who already is over 10x the size of its next closest competitor when including 3P sales (which now make up nearly half of units sold on Amazon).
Is half of your growth coming from eCommerce?? Is at least half of your strategic effort aimed at building a more comprehensive strategy and platform in eCommerce? Even companies that under-index or would not intuitively fit the eCommerce model are seeing unexpected and significant growth beyond physical stores. This means the secular impact is here to stay, and we believe the ceiling is far from reach today (likely moving to +20% of retail sales over the next 15-20 years).
If you are looking to spend more time studying and navigating through eCommerce best practices, Cleveland Research can be a resource for you and your leadership teams. In addition to our regular eCommerce insights we share with our Market Research partners, we launched an eCommerce Council where brands can lean into our new custom solutions and networking engagements with like-minded companies. Let us know if you are interested to learn more and we’ll follow up with more details.