The Only Place People Shop Online Is Amazon
Online shopping in general isn't killing the great American mall, Amazon.com is — singlehandedly so.
Online shopping in general isn't killing the great American mall, Amazon.com is — singlehandedly so. The Internet retailer sells more stuff online than its 12 biggest competitors combined, all of which move an incredibly tiny amount of stuff through their online storefronts, according to new documents from the Securities and Exchange Commission obtained by The Wall Street Journal's Shelly Banji and Paul Ziobro. Companies like Target, Wal-Mart, and PetSmart have all reported huge growth rates in their online sales, but only because their businesses are growing from very small figures. In absolute numbers, the figures from the Journal are paltry:
- "Web-based sales contributed 0.1 to 0.2 percentage point to Wal-Mart's 2.4% increase in U.S. comparable-store sales in fiscal 2013 and 1.6% increase in fiscal 2012, Wal-Mart told the SEC in July."
- "A Target spokesman said that the retailer tells investors online sales currently make up less than 2% of its $73 billion in overall sales."
- "A PetSmart spokeswoman said the chain considers e-commerce a growth opportunity but because it currently represents less than 1% of its sales, it isn't a material part of the company's business."
- Fifth & Pacific, which owns the Juicy Couture, Kate Spade, and Lucky, said "online sales contributed several points of growth in overall sales at Kate Spade, they made much less of an impact at Juicy Couture and Lucky."
Online shopping still only makes up a minority of total retails sales — well over 90 percent of them happen in stores, a Forrester analyst told The New York Times last December. But, the trend is growing rapidly — total E-commerce spending increased 15 percent in 2012, according to ComScore data from February 2013 — and the majority of that growth comes from Amazon. "Its 30% increase in North American sales in the second quarter outstripped the overall e-commerce market and some competitors as well," notes the Journal.
Amazon's dominance has much to do with its inventory. Its most popular items aren't (generally) things people have to try on, for example. People like to go to the store to browse, feel, and try certain items out. In fact, some online-only retailers, like Warby Parker, have decided to create real-live on the street stores so that its customers can try the merchandise before purchase.
Of course, the Internet-only e-giant has had a leg because of its cheap prices and quick shipping: After all, the overhead of an actual store costs more money than storing things in warehouses, and Amazon also had the benefit of not charging sales tax in many states for a long time. Big box stores are starting to catch up in the price department a little bit: A recent analysis found Best Buy items sold for over 6 percent cheaper than Amazon items, The Wall Street Journal reported earlier this week, and new regulations will force Amazon to charge its customers sales tax.
If all of this leads to the slow erosion of Amazon's web dominance, as most people continue to do their shopping offline, then it begs the question: Will Amazon ever open brick and mortar stores? If its warehouses are any indication, such an endeavor would be a logistical nightmare.