The end of 2019 Q1 reports are nearing a wrap up and should be set for release in the upcoming months. If the Q4 reports from 18’ are any indication of things to come than this is shaping up to be an even bigger year than last. A strong fourth quarter in 2018 contributed to the strongest year-over-year growth for U.S. e-commerce in the last seven years, according to the U.S. Commerce Department.
Companies like Amazon accounted for nearly 44% of the market share of ecommerce fulfillment according to the US Census bureau. That left 56% of US based online sales to be shipped from fulfillment companies that actually treat you as a customer and not an account number. Companies like Black Mountain Fulfillment and others have entered the marketplace by strategically partnering with other fulfillment centers to cover the US in a network of shipping routes guaranteeing their customers the fastest delivery of products imaginable. The ideology of these privately owned fulfillment centers is based on the principle that saving costs for the consumer will actually increase their willingness to buy and spend more from the same merchant again in the future. It’s the “without the extra costs” mentality associated with a conglomerate that actually increases costs to the consumer. Why would I spend $99 for “free” shipping on most items when I’m only going to purchase 4-5 items a year. If a consumer paid actual shipping prices on those items they might reach $60 in postage. It’s the savvy consumers that are still finding the items they need online without the hassle of going to a brick and mortar storefront or a supercenter.
When factoring in the impact of e-commerce on retail as a whole, the total retail sales reached almost $3.5 trillion dollars, a 3.8% increase from 2016 which translates into e-commerce representing 13.0% of the total retail sales of 2017, a marked increase from the 11.6% totals reached in 2016. It’s these staggering numbers that also mean that e-commerce represented roughly 49.4% of all retail sales growth in 2017 and 2018.
Although consumer spending is strong and retail spending has shown an increase over the last several quarters the online retailer needs to be well informed when making a decision on how they will get their products to the consumer. By keeping the costs down in manufacturing, storage and shipping it’s these retailers that will feel the biggest boost to their bottom line. Why would I want to spend more money with retailer X when I can go to retailer Y for the exact same product? This logic is why so many succeed and why so many more fail even under the best conditions for retailing in this online world.
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