E-commerce will continue to grow at its present 15 to 20 percent year-over-year rate. When you look at the categories that have less than 50 percent e-commerce penetration, you can see where the opportunities are. Although fashion, travel, books and music are all well-established e-commerce categories with over 50 percent penetration; home decor, furniture, consumer electronics, beauty and personal care, household cleaning and health are all underdeveloped online categories.

Food is, by far, one of the most underdeveloped categories and the most difficult. Packaged goods will have an easier time to transition because a branded box or can is the same no matter what channel it is sold in. Cost-effective shipping is the challenge due to the weight and bulk.

Perishable products will be the most resistant to e-commerce. Consumers still want to choose what fresh products they buy. Everyone has a preference when it comes to the type of meat, fruits, vegetables and other fresh products they purchase.

You can’t fight statistics — so the pace of online sales growth in the highest penetration categories (hard/dry goods) will slow percentage-wise but still represent the bulk of the dollar growth in online sales. In CPG, the online penetration of HBC is already in the 20s as well, so food is likely to be the highest percentage gainer. Our own estimates show FTI may be a bit conservative in forecasting total food penetration to stay in the single digits. Growth in the non-perishable center store categories will lead the way to what we think will be the 10 percent-plus range by 2022. That expectation is based on the acceleration curve of adoption rates in online grocery versus the early trend lines for more developed categories now. Could be right, could be wrong — it’s not a “statistic” until it happens.

“The biggest beneficiary of the shift from stores to online will be Amazon.com” Excuse me: do I look surprised?

“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.” Omnichannel is a given and (listen-up retailers) just a mechanism to enable what you must do to be profitable: meet (exceed really) customers’ wants/needs. The how and why is irrelevant to shoppers who want what they want or will go wherever the least friction to get it exists.

Grocery growth? The same was said about e-commerce in the late-’90s. This time around though, when the tipping point comes, the growth will be significantly faster.

There are two important stats to watch: 1.) the year-over-year growth rate of online sales and 2.) the percentage of online sales going to Amazon. If the year-over-year growth continues at current rates, Amazon will grow ever more dominant. Some current projections have Amazon’s share at 40 percent of current e-commerce. With its brand plus its ecosystem, Amazon is poised to take the lion’s share of e-commerce growth not captured by Walmart. The slowest growth e-commerce category is often projected as food and consumables. But many of these assumptions are based upon current last mile and delivery scenarios. A recent Wall Street Journal article describes how Amazon is taking over the management of the “mail rooms” of major apartment building housing. What will an Amazon-managed mail room mean for ease of use, security and convenience for last mile delivery of food to apartment dwellers? And they are piloting delivery to the trunk of our cars for the rest of us. It is not impossible to imagine a scenario where Amazon buys and/or manages the U.S.… Read more »

There is no reason why this Tsunami will not reach the shores of all brick-and-mortar retailers. As noted in the article, online is a disrupter or a paradigm shift. In such a scenario everyone, including the legacy retailers, go back to zero. As noted the one area of online underdevelopment is in grocery retailing. This will not stay small forever. I envision online capturing a significant portion of what I refer to as replenishment shopping or loading/reloading the pantry. Such a shift does not bode well for the center store of a traditional food retailer. Many of the center store products will be purchased online from the brick-and-mortar retailer and delivered to the store for direct placement into a consumer’s vehicle. However, there is no reason for the traditional retailers to throw in the towel. Besides replenishment, grocery consumers still love to shop. By that I mean experiencing a store’s environment of new and delicious offerings. Replenishing online will free up consumers to shop enhanced and exciting perishable departments, then proceed to a designated area… Read more »

I’m always cautious about these kinds of predictions. Business history shows that they are always wrong — what’s not known is exactly how they will be wrong.

More concerning is the suggestions that Amazon will account for half of online sales. This wouldn’t be surprising — the internet tends toward monopoly because of the incredibly high cost to establish and maintain advantage.

This follows the online advertising trend: Google and Facebook account for 80 percent of advertising dollars online. And there’s the new Scott Galloway book about the four (Google, Apple, Facebook and Amazon) that dominate the web.

I don’t doubt that online penetration will increase, however, I am far more skeptical of the Amazon prediction. It’s perfectly possible that Amazon will have half the market, but given it is impossible to predict competitive dynamics so far ahead it is also quite possible that it won’t! Indeed, there are already quite a number of retailers seeing faster online growth than Amazon in the U.S.

What these stats also fail to show is how much of these online sales are supported by stores — browsing in stores first, picking up from stores, returning items to stores, etc. That’s not to say stores won’t be affected, but the impact is more nuanced than the binary online/physical split.

I think it’s time we start to look at businesses more holistically than simply by channel. Yes, online sales will continue to grow. Yes, there’s an impact of that in-store. And how those channels can work together to drive value for the consumer is much more powerful than a single channel alone. As an industry, we’ve spent the better part of a century finding the exact right places to put stores to be around the people that buy stuff. This is really about how we can use those stores, integrated with online technologies, to better serve the customer.

Online sales will continue to grow as consumers get more comfortable with the process. With time at a premium in today’s busy society, online sales will grow to help ease the time pressure.

Groceries will be a lagging category in online sales. Many people, me included, like to see and feel produce before purchasing. The same is true for breads, milk and other perishable products. While non-perishables might be more readily purchased online the challenge of buying perishables online will slow the grow of online non-perishables as they are most times purchased in the same basket.

As baby boomers begin to retire/shop from home and Gen Z starts to have more buying power, I see online sales growing. But I have noticed recently some issues with online ordering, such as ordering 2 or 3-day shipping but the product isn’t prepared for 3 or 4 days, making the entire process take over a week. Other issues I have seen are poor product descriptions or misleading marketing and having to return an item. If these issues continue to grow along with the demand, I could see online sales slow until they get worked out.

Regarding product migration, I’ve always been fascinated by big bulky items and where those will live. Ideally, if a company could deliver those to the consumer’s door, that would be a major win for convenience. However, those also cost the most (dimensions and weight) and sound like a nightmare from a logistics point of view. Can’t wait to see how those play out.

Food may indeed be the final frontier for online shopping. Online grocery shopping has been around for almost 30 years now, with Peapod starting the effort. I know this category is gaining online interest, however, people take food very personally, as they should. Perhaps when we have taste and smell-sensory technologies available online, then the breakthrough may finally happen.

The problem with studies such as this one cited in the article is that they assume current business models will remain unchanged and represent a complete lack of innovation. They assume that the current disruptors will be the only disruptors going forward which is a contradiction to the concept of disruption! While it makes for a great prediction, the industry isn’t quite that black and white. It’s no longer a digital vs physical world — channels simply aren’t as important as they used to be in terms of metrics and predicting the future. For example, this doesn’t take into account the influence digital has on physical store sales and vice versa! That being said, yes, online sales will continue to grow at a high rate, and yes, Amazon will most likely take a big piece of that market share. But that doesn’t mean we won’t see another disruptor enter the market. I would like to see studies like this not look at the entire retail market as one market, but rather focus on individual product… Read more »

Yes, online will continue to grow and evolve as companies like Amazon find new ways to deliver value and convenience to the customer. Almost everything will be available online with some type of delivery or pickup option. But what about traditional brick-and-mortar? Well, it’s not dead. Even Amazon knows this as they start to move into physical locations.