What’s behind the US e-commerce statistics?
E-commerce is a rapidly growing force in North American retail, with headline e-commerce growing more than six times faster than the pace of all other retail channels over the past 18 years. In 2018, e-commerce accounted for 9.7% of total retail sales according to the US Census Bureau. This suggests that e-commerce still has ample room to grow, but it is also a somewhat surprisingly low market share given the 18% average annual growth for e-commerce over the past 18 years and the ubiquity of electronic shopping in the contemporary landscape.
Part of the explanation for e-commerce still having a market share of less than 10% is because the headline retail sales figures include categories that might not typically be considered part of retail, such as automotive and fuel sales. The Census Bureau defines e-commerce as sales for which terms are negotiated online, so transactions such as automotive purchases customized via a website, but still largely negotiated through or even at a dealer, can qualify as e-commerce. Categories that are largely irrelevant to packaging and more stereotypical e-commerce retail; auto dealers and gas stations, may figure largely in the headline retail numbers, but they have little to no relevance for packaging. In the USA, e-commerce currently accounts for 13% of retail sales excluding autos (but including auto parts) and gas.
Include mail order sales
Mail order sales have a supply chain that is very similar to e-commerce, so their inclusion is both appropriate and convenient given that the most detailed breakdowns of e-commerce also include mail order houses. In the USA, this gives a 17-18% retail share for e-commerce and mail order, again excluding autos and gas, in 2018. Canada's e-commerce and mail order sector is much less developed, with about a 5% share of similarly defined retail sales.
The GAFO block
Another common refinement of the retail sector is the "GAFO" block: general merchandise, apparel and accessories, furniture and other. We have seen some estimates of a 30% or more share for e-commerce in GAFO, but this high of a share is only possible if all e-commerce sales are considered as part of GAFO, which is certainly not the case, as drugs, health, and beauty, the largest e-commerce and mail order merchandise category, has a 24.5% share of all e-commerce and mail order sales but is not part of GAFO. A more accurate estimate of the e-commerce and mail order share in GAFO would be around 22%. Mail order sales have a supply chain that is very similar to e-commerce, so their inclusion is both appropriate and convenient given that the most detailed breakdowns of e-commerce also include mail order houses.
40% of retail growth
Despite the many choices available when attempting to accurately define the most relevant aspects of e-commerce, the fundamental conclusion remains that e-commerce is rapidly gaining in importance in the North American retail landscape. Even with only a 13% market share, e-commerce and mail order excluding autos and gas have accounted for well over 40% of the growth in US retail over the past four years. The e-commerce and mail order supply chain has been much more corrugated-intensive than traditional retail logistics, by six to seven times, so the ascent of e-commerce retail has provided a boost to corrugated demand, with e-commerce and mail order accounting for about half of corrugated box shipments to the US retail sector despite only a 17% share of spending.
Derek Mahlburg, Senior Economist, North American Graphic Paper, is the lead author of the Impact of E-commerce on North American Paper Packaging Markets and co-author of the Paper Trader, the North American Graphic Paper 5-Year Forecast and the North American Graphic Paper 15-Year Forecast.
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