Study: U.S. online retail sales on pace to top $1 trillion by 2027
Online retail sales momentum is so strong that volume will increase at a compounded annual growth rate (CAGR) of 9% over the next decade.
Based on this rate, U.S. online retail sales are expected to surpass $1 trillion in 2027. This eclipses the $445 billion sales level expected for 2017, according to the “2017 U.S. Online Retail Forecast,” a report from FTI Consulting.
According to the data, U.S. online retail sales grew by 15.5% year-over-year (“YOY”) through the second quarter of 2017. This surpassed online sales growth from 2016, which reached 14.9% YOY. Overall, the online channel now accounts for 12.2% of total U.S. retail sales (excluding auto and gas). However, this number is expected to reach 22% by 2027.
Amazon.com will account for more than half of U.S. online sales by 2027. This is a jump from the current share of 34.2%, previously reported in FTI Consulting’s report, “Is Amazon Invincible? Store-Based Retailers at Tipping Point.”
“The impact of accelerating online sales growth has been evident in the past two years, with elevated levels of retail bankruptcies and announced store closures amid a non-recessionary environment,” said Christa Hart, a senior managing director in the Retail & Consumer Products practice at FTI Consulting.
“If online sales double by 2023, as we expect, stores will have to contend with the prospect of losing the same amount of sales to the online channel in the next six years as they did in the previous 16,” she added. “The frustration for many retailers is that even building a complex and expensive omnichannel enterprise has just kept them in the game instead of leading to renewed profitability.”
The online channel accounted for nearly 50% of total retail sales growth in the past year. With most Americans already shopping online, future growth will come from shoppers using the medium to purchase more frequently and across more product categories than they do currently, the firm predicted.
Grocery is one sector that continues to challenge online retailers seeking to expand market share. Current online market penetration is less than 2%, despite grocery and home meal solutions being a $750 billion category. As a result, grocery’s online market share may only reach the mid- to high single-digits, according to the report.
“Grocery is the current obsession of many online retailers, but U.S. consumers have still not embraced online grocery shopping and appear to prefer to shop for their food in-store,” said Khaled Haram, senior managing director in the Retail & Consumer Products practice at FTI Consulting.
“Tens of billions of dollars in sales migration to online are at stake in this category, so efforts and investment by Amazon, Walmart and others will attempt to break down these barriers to adoption in the next few years,” Haram added. “It is increasingly clear that physical stores will play a role in that effort to get more shoppers buying their groceries online.”
Based on this rate, U.S. online retail sales are expected to surpass $1 trillion in 2027. This eclipses the $445 billion sales level expected for 2017, according to the “2017 U.S. Online Retail Forecast,” a report from FTI Consulting.
According to the data, U.S. online retail sales grew by 15.5% year-over-year (“YOY”) through the second quarter of 2017. This surpassed online sales growth from 2016, which reached 14.9% YOY. Overall, the online channel now accounts for 12.2% of total U.S. retail sales (excluding auto and gas). However, this number is expected to reach 22% by 2027.
Amazon.com will account for more than half of U.S. online sales by 2027. This is a jump from the current share of 34.2%, previously reported in FTI Consulting’s report, “Is Amazon Invincible? Store-Based Retailers at Tipping Point.”
“The impact of accelerating online sales growth has been evident in the past two years, with elevated levels of retail bankruptcies and announced store closures amid a non-recessionary environment,” said Christa Hart, a senior managing director in the Retail & Consumer Products practice at FTI Consulting.
“If online sales double by 2023, as we expect, stores will have to contend with the prospect of losing the same amount of sales to the online channel in the next six years as they did in the previous 16,” she added. “The frustration for many retailers is that even building a complex and expensive omnichannel enterprise has just kept them in the game instead of leading to renewed profitability.”
The online channel accounted for nearly 50% of total retail sales growth in the past year. With most Americans already shopping online, future growth will come from shoppers using the medium to purchase more frequently and across more product categories than they do currently, the firm predicted.
Grocery is one sector that continues to challenge online retailers seeking to expand market share. Current online market penetration is less than 2%, despite grocery and home meal solutions being a $750 billion category. As a result, grocery’s online market share may only reach the mid- to high single-digits, according to the report.
“Grocery is the current obsession of many online retailers, but U.S. consumers have still not embraced online grocery shopping and appear to prefer to shop for their food in-store,” said Khaled Haram, senior managing director in the Retail & Consumer Products practice at FTI Consulting.
“Tens of billions of dollars in sales migration to online are at stake in this category, so efforts and investment by Amazon, Walmart and others will attempt to break down these barriers to adoption in the next few years,” Haram added. “It is increasingly clear that physical stores will play a role in that effort to get more shoppers buying their groceries online.”