Tag Archives: e-commerce

Brick & Mortar Melts Down as Ecommerce Jumps by Most Ever, by Wolf Richter

Posted on November 22, 2019 | Leave a comment

E-commerce continues to take more of the retail dollar away from bricks and mortar stores. From Wolf Richter at wolfstreet.com:

Department stores get crushed one by one.

Ecommerce sales in the third quarter 2019 spiked 17.3% from a year ago to $145.7 billion, not seasonally adjusted, according to the Commerce Department. On a seasonally adjusted basis, sales hit $154.5 billion. Ecommerce sales will exceed $600 billion in 2019, double the amount five years ago. In dollar terms, ecommerce sales jumped by $20.4 billion in Q3 compared to a year ago, the biggest dollar-jump in the history of ecommerce:

Ecommerce sales include the ecommerce operations of brick-and-mortar retailers, many of which have built thriving online operations: Among the top 10 ecommerce retailers, behind Amazon and eBay, are the online divisions of seven brick-and-mortar retailers, according to eMarketer, in that order: Walmart, Apple, Home Depot, Best Buy, Macy’s, Qurate Retail Group (QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, and Grandin Road), Costco. The 10th in the top ten is Wayfair, an ecommerce retailer.

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How Amazon Rules, by Wolf Richter

Posted on July 14, 2018 | Leave a comment

Amazing Amazon: like or hate the company, it dominates e-commerc. From Wolf Richter at wolfstreet.com:

It owns 33% of the internet “cloud,” 49% of US e-commerce, and is elbowing into other sectors.

Amazon (AMZN) is a Goliath in very different sectors. One is the internet cloud, a booming business. Amazon Web Services has evolved into the single largest player offering cloud computing services to companies, governments, and individuals. In the first quarter, AWS owns 33% share of the cloud infrastructure market, ahead of Microsoft (MSFT) with a 13% share, and Google (GOOG) with a 6% share. Being the biggest kid on the block, it has become the shoo-in for a multi-year $10-billion Pentagon contract. That business is highly profitable.

Less profitable are Amazon’s e-commerce operations. But in terms of magnitude, Amazon totally rules. According to a report from eMarkter, cited by CNBC, Amazon’s online sales in the US are expected to surge 30% in 2018 compared to a year earlier, to $258 billion. This would boost Amazon’s share of US e-commerce sales of 49.1%!

The other combatants are fighting over the crumbs in terms of market share. The next nine largest e-commerce operations combined grab about 22% of the market:

  • eBay (EBAY): 6.6%
  • Apple (AAPL): 3.9%
  • Walmart (WMT): 3.7%
  • Home Depot (HD): 1.5%
  • Best Buy (BBY) 1.3%
  • QVC Group (QVCA): 1.2%
  • Macy’s (M): 1.2%
  • Costco (COST): 1.2%
  • Wayfair (W): 1.1%

That leaves 29% of e-commerce for all the other retailers with online operations, from Bed Bath & Beyond (BBBY) to the tiniest home-office operations, millions of them.

Amazon online sales fall into two categories: its “direct sales” and the sales from other sellers that use Amazon’s platform and execution (“Marketplace sales”). Both are growing in leaps and bounds, but Marketplace sales are growing the fastest.

In 2018, Marketplace sales are expected to account for 68% of Amazon’s e-commerce sales, and direct sales for 32%, according to eMarketer estimates.

Overall, e-commerce sales in the US have soared 16% in the first quarter from a year ago and are on track to exceed $500 billion this year.

But some types of sales have resisted the move to the internet, largely because of the type of product that doesn’t lend itself easily to online sales: gasoline, new and used vehicles, groceries, and beverages. Together they account for 51% of total brick-and-mortar sales.

To continue reading: How Amazon Rules

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Brick & Mortar Meltdown Pummels These Stores the Most, by Wolf Richter

Posted on May 17, 2018 | 1 comment

Many brick and mortar stores are getting killed by e-commerce. From Wolf Richter at wolfstreet.com:

Only about half of retail is under attack from e-commerce, but that half is getting crushed.

E-commerce sales in the first quarter soared 16.4% from a year ago to a new record of $123.7 billion (seasonally adjusted), according to the Commerce Department this morning. E-commerce includes sales by online retailers such as Amazon but also by the online operations of brick-and-mortar retailers, such as Walmart, Target, or Macy’s. Over the past five years, e-commerce sales have doubled:

Many observers keep pointing out that e-commerce still accounts for only a small part of total retail sales — in Q1 a new record of 9.3%. And so these observers say the brick-and-mortar meltdown isn’t happening. But it’s not that simple.

There is a bitter reality hidden under these averages: Some retail sectors are getting totally crushed by e-commerce, but others remain largely resistant for now – and this has been borne out by retailer bankruptcies and liquidations over the past three years.

How did brick-and-mortar retail do on its own?

Total retail sales in Q1 – e-commerce and brick-and-mortar combined, but excluding sales at restaurants and bars – increased 5.3% year-over-year to $1.31 trillion.

Retail sales without e-commerce in Q1 rose 3.4% from a year ago.

The “online resistant” bunch: These are brick-and-mortar sectors whose sales have not massively migrated online, for various reasons, including the nature of the product. Most prominently: Gas stations, auto dealers, and grocery and beverage stores. These “online-resistant” sectors combined account for over half of all brick-and-mortar sales. In Q1, their combined sales rose 4.6% to $610 billion.

The “under-attack” bunch: Most of the remaining sectors are under all-out attack from e-commerce. And sales at the “under-attack” sectors edged up only 2.1% in Q4, below the rate of inflation as measured by CPI, even as e-commerce sales surged 16.4%. This chart shows how e-commerce is eating into the share of the brick-and-mortar retailers that are under attack:

But even that chart averages out the meltdown in specific sectors. Some brick-and-mortar sectors have already been largely wiped out, such as music stores and video stores. Others have been decimated by e-commerce, such as sales at book stores and toy stores, including Toys “R” Us which is currently being liquidated.

To continue reading: Brick & Mortar Meltdown Pummels These Stores the Most

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The ‘Retail Apocalypse’ Is Officially Descending upon America, by Carey Wedler

Posted on March 24, 2017 | 1 comment

The hits just keep on coming on the retail front. From Carey Wedler at theantimedia.org:

Consumerism has long been a defining element of American society, but retail giants are now shutting down thousands of their locations amid a long-anticipated “retail apocalypse,” as Business Insider describes it.

The outlet reports that over the next couple months, more than 3,500 stores are expected to close:

“Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.”

Some stores, like Bebe and The Limited, are closing all of their locations to focus more on online sales. Other larger chains, like JC Penney, are “aggressively paring down their store counts to unload unprofitable locations and try to staunch losses,” Business Insider notes. Sears and K-Mart are following a similar trajectory moving forward.

Sears is shutting down 150 Sears and Kmart locations, about 10% of their shops. JCPenney is shutting down 138 stores, about 14% of their total locations.

These closures are the consequence of several different factors. First, the United States has more shopping mall square footage per person than other parts of the world. In America, retailers reserve 23.5 square feet per person; in Canada and Australia, the countries with the second- and third-most space have 16.4 and 11.1, respectively.

Another reason retail brick and mortars are failing is the growth of e-commerce. Between 2010 and 2013, visits to shopping malls declined 50%, according to data from real estate research firm Cushman and Wakefield. Meanwhile, online sales from huge online outposts, like Amazon, have exploded.

To continue reading: The ‘Retail Apocalypse’ Is Officially Descending upon America

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Worse Than a Decade of Stagnation, by Wolf Richter

Posted on February 18, 2017 | Leave a comment

SLL has long maintained that the economy is in much worse shape than indicated by official statistics. With President Trump taking office, it’s a good bet the numbers will catch up with reality. From Wolf Richter at wolfstreet.com:

Retail sales are held up by only two sectors. The rest are sinking.

There are two components of “retail and food services sales” that have been booming over the past few years through the fourth quarter 2016. And then there’s all the rest combined – 71% of total retail sales – that has been in decline since the third quarter of 2008. That’s the tough reality of retail sales in the US.

First the good news: e-commerce sales

In the fourth quarter, e-commerce sales soared 14.3% from a year earlier, to $123.6 billion, not adjusted for seasonality and price changes, according to the Commerce Department today. E-commerce sales for the entire year 2016 jumped 15.1% year-over-year to $394.9 billion, accounting for 8.1% of total retail and food services sales, up from 7.3% in 2015. You see where this is going.

E-commerce sales include online sales by retailers with brick-and-mortar stores, such as Walmart and Macy’s that are all trying to carve out a presence on the internet, with varying success.

This chart uses seasonally adjusted e-commerce sales to eliminate the very large seasonal fluctuations, including the spike every Q4 and plunge every Q1, but it’s not adjusted for inflation:

While e-commerce soared 14.3% year-over-year in Q4, total retail and food services sales, including e-commerce, rose only 3.9%. In all of 2016, total retail sales edged up only 2.9% from 2015. So what is left over once e-commerce is removed from the equation?

To continue reading: Worse Than a Decade of Stagnation

 

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