U.S. Online Retail Sales to Reach $525 Billion In 2018

FTI Consulting, a global business advisory firm, recently released its 2018 U.S. Online Retail Forecast, predicting that U.S. online retail sales will hit $525 billion by the end of 2018. If the sales reach that cap, it would mark a 15.9% increase over the total online retail sales of $452 billion in 2017.

As this year witnessed much better results than last year, the firm further predicted that U.S. online retail sales will reach $660 billion by 2020 and exceed $1 trillion in 2025. All of these estimates amount to a compound annual growth rate (CAGR) of almost 10% over the next decade.

FTI Consulting researchers also estimated that total U.S. online retail sales will level off at 25% around the year of 2030. They reported that the annual online market share gain has 135 basis points this year and that the growth of online sales will start to gradually decrease next year.

E-commerce currently accounts for 13.2% of all online retail sales in the United States, not including auto and gas sales. If the supermarket sales are not included, e-commerce then accounts for 15.7% of U.S. online retail sales.

“the online channel is taking a disproportionate share of total retail sales growth, with U.S. online sales growth accounting for 46% of total retail sales growth over the past year, an increase of more than 15 percentage points since late 2014.” – FTI Consulting

The 2018 U.S. Online Retail Forecast also mentions Amazon and its very high online market share, which is expected to continue to grow. The report predicts that the Seattle-based ecommerce giant’s online retail market share will increase from 35.7% in 2017 to 39.7% in 2018. The forecast is also that it will even increase to 50% in 2023. Recently, we covered similar statistics based on an eMarketer report.

This huge growth of Amazon’s online retail sales is becoming a threat to other major omnichannel retailers, as retaining and increasing their online market share has become quite challenging when there’s a major player like Amazon on the field. In order to reach Amazon’s success, they would have to compromise their margins and profitability, which is certainly out of the question.

Nevertheless, they can still prosper if they take all the right steps. According to Christa Hart, a senior managing director in the Retail & Consumer Products practice at FTI Consulting, they need to develop effective omnichannel strategies that will help them stay relevant and competitive on the market, instead of only being focused on increasing profit and ROI.

Christa Hart also reported on the matter that online retail sales are “growing at a respectable rate for many omnichannel retailers in large part because they continue to bear nearly all the associated costs of attracting and accommodating online shoppers, while their store-based sales often languish.”

J.D. Wichser, a senior managing director and the leader of the Retail & Consumer Products practice at FTI Consulting, stated that retailers with “a distinctive and cohesive omnichannel strategy combined with the ability to flawlessly execute on the operational dimensions will steal share, at an increasing rate, from those that can’t.”

“This will be a rude and expensive awakening for many that have devoted considerable investment and effort in an attempt to transform their retail business,” Wichser added, but it will be the only way for them to effectively beat all the challenges and gain a competitive edge.