Data Shows Big Disparities Between Sectors in Online Performance

Retailers and brands have been bombarded with the message that the future is online, and they’d better get their act together with their e-commerce strategy if they’re going to remain competitive. Some retail and brand leaders tend to think that if they simply put up a website, install their product line on it, run a sale and conduct email blast campaigns, they’re doing the right thing. But that’s not enough. As it turns out, even with a total U.S. online market of $453 billion, there’s no one-size-fits-all equation to successful e-commerce.

We’ve been looking at online performance across categories through the filter of our NPD Checkout E-commerce service, which tracks sales at the receipt level, and have found that all online categories are not created equal. While some sectors have shown healthy gains in both spend per buyer and in penetration (defined here as the percentage of the entire adult online buying population who buy in that industry), there are distinct market sectors whose e-commerce performance is clouded. An example of the sharpest contrast is online sales of consumer technology, which posted 41 percent penetration in 2017, up nearly seven percentage points from the previous year, versus major home appliances, which showed only two percent penetration with no change year over year.

Brick and mortar is still king in the land of retail, and e-commerce isn’t necessarily doing what everyone thought it would—namely, knocking it off its throne. Our data show that there’s an imbalance in brick-and-mortar to e-commerce ratios in some sectors. When we dig deeper we find there are some lessons to be learned by applying knowledge gathered in one category to another category. For example, in automotive products there is a consumer demographic-driven preference for brick-and-click that skews penetration away from pure-play e-commerce; online penetration is only about 12 to 14 percent. These results tell a potentially positive story for the state of brick-and-mortar retail, and we think that data analysis can actually shine a clearer light on other sectors where online growth has also been more limited than we might have expected.

The Categories, the Numbers

Our Checkout E-Commerce data encompass year-over-year changes in online penetration, purchase frequency, spend per purchase and spend per buyer in nine different categories— apparel, automotive products, consumer technology, footwear, home textiles, housewares, major home appliances, office supplies and small appliances. Three clear winners — apparel, footwear and tech — showed healthy gains in penetration—apparel posted a whopping 47 percent penetration, up three percent year-over-year, footwear 34 percent penetration also with a three-percentage-point bump, and consumer tech results noted above. The wins are also measured in spend per buyer—an 11 percent lift from 2016 to 2017 for apparel, seven percent for consumer tech and six percent for footwear.

In contrast, there are huge online opportunities for growth in a category such as major home appliances, whose penetration barely scratches the surface of what is possible. Then there are murkier cases like office supplies and housewares, whose lower and stagnant penetration numbers (17 and 20 percent, respectively) seem to call for more creative strategies to lure people to buy online. Our data show that these sectors, along with home textiles, seem to be challenged with per-buyer spend declines.

How can retailers climb out of the hole? We’ll explore four tactics to achieve this in our next article.