Online Retail Trends You May Have Missed

The retail industry is showing strong growth with the addition of 230,800 jobs in the 12 months through June. Although the majority of retail sales are still made in stores, online sales are the biggest growth area. Online retail sales increased by 17 percent in the past year based on a 2013 U.S. Department of Commerce report.

Amazon vs. the World

According to the National Retail Federation, for the first time, Amazon has joined the ranks of the top 10 retailers after growing a whopping 27 percent last year to almost $43 billion in sales.

In stark contrast, the top 25 retailers’ online revenue added together is not as great as Amazon’s. One of the fastest growing in online sales was Walmart with online sales growth of 30 percent last year. But Walmart’s total online sales just barely match Amazon’s growth in sales of $10 billion.

Delivery Competition

To counter Amazon prime delivery time of 2 days for most orders, brick and mortar retailers are building on their wide-spread physical presence for delivery of online orders and to increase shopping convenience. Shopping center vacancy rates continue to be low and rents are gradually rising in part due to new national brand retail outlets.

Walmart has the most aggressive store expansion. Walmart will open about 300 new Neighborhood Market and Walmart Express stores this year, adding more online delivery coverage. In addition to more stores, Walmart opened three new online fulfillment centers in 2013 to support its goal of being able to deliver online orders anywhere in the country within 2 days.

Grocers have lagged other retailers in online sales growth, but the order online and pick up at a store delivery method is starting to grow. Publix is having notable success.

Whole Foods and Trader Joe’s are quickly adding stores to progress towards a national foot print. Whole Foods is beginning to experiment with online ordering and pick up in stores. Trader Joe’s sells their products on Amazon but not does not have an online store.

A just completed study by PriceWaterHouseCoopers found that only about 1 percent of U.S. consumers purchase most of their groceries online, but the study goes on to say that the technology landscape and changing demographics will drive more growth in the future. The U.S. is playing catch up with England where 5 percent of groceries are bought online.

Kroger, the largest U.S. supermarket chain and second largest U.S. retailer, recently announced the purchase of online vitamin retailer Vitacost. Vitacost had surprisingly large revenue last year of $383 million from the sale of vitamins, herbs, health foods, and nutrition products.

Not All Retailers

Some retailers are proceeding more cautiously. Target has started testing a small-store urban initiative called Target Express. Costco is intentionally staying away from smaller stores for now.

In the small-format value category, Dollar General supports online orders but not delivery in stores despite having over 11,000 retail locations. Family Dollar with almost 8,000 stores has no online order offering at this time.

Any Order Method

EDI transactions for online orders frequently have unique requirements. CovalentWorks supports EDI capability with your retail customers for online orders or any order method that is needed. Contact us anytime to find out more.

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