The figures are in for 2014’s ecommerce sales, and U.S. online retailers are celebrating their most successful trading year in history.
According to new figures released by the Commerce Department, last year web sales reached $304.91 billion – marking the first time online spending has passed the £300 billion mark since records began in 2004.
It seems the growing trend towards ecommerce is accelerating at a rapid pace, as Q4 saw the greatest level of interaction; digital activity reached $95.98 billion during this period, accounting for more than 30% of 2014’s total online expenditure.
To put this upward trend into perspective, the U.S. is experiencing its sharpest ecommerce growth since the early days of online shopping. Ten years ago in 2005, Internet retailing generated just over £91 billion during the course of 12 months, an increase of 24% on the previous year.
And while it’s typical of trends to slow in pace when they transition from emerging to maturing, this has not been the case for online retail. Following a dip between 2008-2009, when growth reduced to single digits – likely to the impact of economic austerity – ecommerce has taken off again.
Over the past 5 years, the minimum growth rate for online shopping has been 14.7%, while digital spend jumped by more than $40 billion between 2013 and 2014. In fact, when auto and fuel sales – which don’t tend to take place online – are excluded, e-tail contribution rises to 8.3% of total retail sales, marking a 0.9% increase on 2013.
The National Retail Federation has predicted ecommerce sales will rise by a further 4.1% during 2015, excluding automobile, foodservice and fuel sales. Of course, there will be individual retailers that exceed these predictions – including some who already have.
Online giant Amazon recently revealed a profit of $214 million purely for the holiday season. Across 2014, it brought in $89 billion profit, which equates a 20% rise on performance the previous year.
In addition, several omnichannel retail businesses have announced ecommerce results taking the fight to their store footprint. For instance, Dick’s Sporting Goods revealed 0.7% growth in its online sales share between 2013 and 2014. Though this might not sound particularly impressive, the impact is clearer when translated into numbers. Internet Retailing calculates this means ecommerce sales reached $106.3 million last year, compared to $85.7 million the previous year.
Dick’s CEO, Edward Stack, has already publicly revealed that he expects the value of online shopping to overtake in-store transactions by 2017. The retailer has already more or less equalized profit margins between its online and offline operations, often by rolling out its ship from store functionality to fulfill orders across channels.
Despite widespread success for U.S. ecommerce retailers, however, it’s worth North America taking note of activity in other markets. In China, for example, online marketplace Alibaba dwarves Amazon in terms of market growth, capitalizing on Chinese shoppers increasing adoption of online shopping.
Alibaba actually recently overtook Amazon as the world’s most valuable online retailer last year; the Chinese company was valued at $167.6 billion in 2014, more than $15 billion higher than Amazon’s $150.2 billion market capitalization.