Is e-Commerce Facing its Limits?

Is e-Commerce Facing its Limits?

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The rise of e-commerce to an €80 billion business in the first half of 2019 (excluding North America) created the need for 24/7 retailing, according to GfK. But China and Germany are already showing early signs of online retail’s share plateauing.

A borderless shopping experience is more than purchasing online, it’s about providing the right retail formats in any given shopping situation. It offers a vital opportunity for all retailers to retain customers within their traditional and online shopping universe, ideally switching seamlessly from one to the other. In the first half of 2019 a quarter of the total value of all technical consumer goods sold globally was delivered through online sales (€80 billion excluding North America).

On a regional level, APAC and China are the key markets for online sales. Historically Chinese e-commerce retailers have enjoyed significant double-digit growth, but in the last twelve months, growth rates have fallen. While the total online market for technical consumer goods in China grew by 8 percent, the major domestic appliances and consumer electronics sectors experienced their first negative rates in the online channel.

In Western Europe, online retailers have also been steadily growing their share of online, from 20 percent in 2016 to 26 percent turnover share today. Due to such a mature market size of €23 billion, e-commerce is starting to see signs of plateauing shares. For instance, in Germany the share has been stable at between 22 percent and 23 percent over the past four years.

Offering the right assortment is key to delivering a rich shopping experience. GfK’s consumer insights reveal that one third of customers choose a retailer based on the right assortment availability, this reason is second only to price. Comparing assortments, online retailers have the advantage when it comes to size. The average assortment of online shops is 2.5 times bigger than that of traditional retailers.

GfK sees that the new trend is for proposing the right retail format for the situation in order to deliver the best shopping experience. Over the past four years, sales of omnichannel retailers have grown by more than 60 percent, while pure players grew 25 percent. There are always more opportunities for retailers to improve their offerings. Connecting all channels through marketing and promotions enables retailers to retain more customers than ever before.

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