U.S. online sales will surpass $530 billion by 2020

May 2, 2016 02:42 PM

Shoppers in the U.S. will spend more than $530 billion online by 2020 according to Forrester Research Inc.

In a new report from Forrester titled “U.S. Online Retail Forecast: 2015 to 2020,” Forrester vice president and principal analyst Sucharita Mulpuru projects U.S. shoppers will spend $530.6 billion online by 2020, up 56.9% from Forrester’s estimate of $338.1 billion in 2015 and 42.4% from a projected $372.5 billion this year. Mulpuru predicts Inc., No. 1 in the Internet Retailer 2016 Top 500 Guide, will be a key factor in pushing past that milestone.

“Of the total growth in e-commerce between 2014 and 2015, Amazon’s U.S. online retail business comprised 60%,” Mulpuru writes. Mulpuru's data is consistent with what Internet Retailer found in putting together this year's Top 500 Guide, which found Amazon alone accounted for 60.5% of all online sales growth in the U.S. last year.

But other factors besides Amazon’s growth will fuel increasing web sales, according to Forrester. They include a stronger economy, retailers gaining more repeat business from customers and a strong push to marry online and offline shopping channels to maximize efficiency, according to the report.

“Omnichannel efforts like endless aisle, ship-from-store, and in-store pickup programs have supported e-commerce by enabling merchants to transform slow-turning or ‘trapped’ inventory into incremental sales,” Mulpuru writes. The term “endless aisle” refers to a retailer’s ability to offer more products online than it can in a typical store.

“While omnichannel efforts are still a work in progress for many merchants, we hear from merchants that these services improve customer satisfaction and directly facilitate faster delivery of products to shoppers,” she writes.

In order to more effectively compete with Amazon, Mulpuru writes that retailers need to do three things: Sell brands or products that Amazon isn’t selling, figure out where they are falling behind Amazon and other rivals online and adapt. “While a category like apparel won’t be made obsolete by digital solutions, pricing pressure will continue to weigh on the sector, particularly as companies like Amazon invest in private-label apparel products,” she writes.

Retailers also need to do a better job reaching shoppers on the go. Mulpuru cites data from Bizrates Insights, a division of retail marketing vendor Connexity (formerly Shopzilla), that shows 78% of shoppers have faced challenges when trying to make a purchase on their smartphones.

“They have been frustrated by purchasing on their mobile phones due to factors like the download time and size of the screen,” she writes. “The form factor means that direct conversion rates are low, and consumers just don’t find it easy to buy most items on small phones.”




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