On the back of Amazon online shopping boosts to #2 in the U.S. retail market

by Paul Davenport on July 19, 2019

According to the latest figures from the Commerce Department, online shopping has overtaken grocery stores and restaurants in terms of retail market share to become the second largest category in this sector, trailing only vehicle and auto parts sales in the United States as of this June.

As to be expected, a great deal of the surge in popularity for online retail can be attributed to the still expanding footprint of Amazon in the minds of consumers, which helped boost the sales in this category 1.7 percent last month while pushing the overall retail sector up by 0.4 percent.

This marks the first time that non-store retailers had ranked so high in the Commerce Department’s monthly report. Back in February, the total market share of online shops reached higher than general merchandise sales for the first time in history.

In total, non-store retailers accounted for 12.45 percent of the national retail spend in June — ahead of the 12.44 percent going to grocery stores and 12.41 percent at restaurants and bars. Translated into actual dollars, Americans spent $64.7 billion online in June.

While the difference between the market share of non-store retail, grocery stores and restaurants may seem miniscule, this marks a tipping point that the economy has been moving toward in fits and starts since before the first dotcom bust. Back in 1992, food and beverage had an almost 20 percent share of the retail market while non-store purchases took up less than 5 percent.

Source: Bloomberg

Interestingly, despite what headlines may indicate, the growth of online sales hasn’t necessarily been at the expense of food stores or other traditional brick-and-mortar establishments. While these brands posted a market share of less than 10 percent in the early 2000s, they’ve actually seen their share of the market grow steadily alongside online shopping.

This all goes to show that the retail sector isn’t so much moving to the Web en masse, but becoming a thoroughly multichannel arena. Recent reports show that even when consumers purchase a product online, two thirds still visit a physical store in relation to the purchase before or after completing a sale.

For brands to compete and succeed in a multichannel retail world, they need to make sure the underlying infrastructure connecting each channel is both robust and responsive. This requires a greater emphasis on visibility across already heavily distributed retail networks on all sides: Whether that’s providing customer WiFi or powering “virtual dressing rooms” in the front of house, or connecting warehouses and suppliers with branch offices in the back of house.