70% of the entire American adult population and 87% of the UK’s have bought at least an item online in the past year
If you were to go back in time and tell someone you can materialise a pre-fabricated home in a shipping container right by your doorstep, they would have called you crazy.
Fifty years ago, who would have thought that you could get anything literally, anytime, and sometimes delivery is even free?
Online shopping is a force to be reckoned with. Approximately 1.5 million retailers sell online as of today. You can get literally anything you want, from food to a new car.
Online shopping is huge.
HUGE.
The US and the UK generate an average of $2000 and $1600 in revenue respectively per shopper. And when 70% of the entire American adult population and 87% of the UK’s have bought at least an item online in the past year, you can guess just how huge this “trend” is.
So, here at topflight, we have carried out research so you know the past, present and future of online shopping.
This article is for eCommerce owners who want a glimpse into the future, historians who fancy a trip back to the Internet’s origins, or simply entrepreneurs who want to find out more about online shopping.
The birth of online shopping? The 1980s
Online shopping was already a thing in the 1980s. Although the process wasn’t as straightforward nor convenient, it was definitely there.
The Boston Computer Exchange, BCE for short, is considered the world’s first eCommerce.
With a foothold in the IT business, BCE is considered the pioneer of a “fully automated, online trade system for general commerce and eventually Internet-based business”.
Boston Computer Exchange, however, failed miserably both as a project and as a business: 1980s’ Internet speed, poor management and poor information broadcast led to BCE “decomposing” and shifting towards a more traditional wholesale enterprise with a few online aspects such as online auctions.
These nonetheless paved the way for our eCommerce today, but it did not save Boston Computer Exchange, which was bought by The Hewlett-Pack company (HP) and then killed off in a silent and somewhat depressing manner.
Netscape started...
Boston Computer Exchange’s demise was perhaps a case of “being too early to the game”. Not enough access to the internet, or lack of valuable information?
One may argue that internet shopping evolved alongside the Internet. When the National Science Foundation lifted its commercial restrictions in 1991, it marked a pivotal moment in the rise of eCommerce.
It paved the way for the first-ever browser, the now-deceased Netscape. It is impossible to deny that it was the moment the Internet became an accessible, easy-to-use tool for people to do literally anything they wanted.
Barely a few months after the launch of Netscape, both Amazon and eBay became a thing. And they were a smashing success.
...then Amazon came and won big
Amazon is the founding father of online shopping. Although it was originally a platform to sell books, we all know how that turned out for Jeff Bezos, who launched the platform in the 1990s.
Within 30 days, Jeff was already delivering products to 45 countries – 30 years have passed since then, and its success is undeniable.
Amazon as a company is growing, and its present numbers are known, envied and criticised by many. 1,6 million employees, 33 billion dollars in 2021 and enough money to fund a whole space mission.
Amazon is a vital, yet terrifying presence on the market. Its sheer size has led to countless controversies (how to not forget the unlivable working conditions Amazon poses on its employees?), but these controversies do not neglect the overwhelming success of the eCommerce giant.
Since the rise of Amazon, thousands have followed, adding more and more to the worldwide eCommerce market.
And now it became a huge market, available to everyone, and the pandemic only made it bigger
For sure, the accessibility of online transactions has facilitated the growth of online shopping.
Services such as PayPal, Wise, Klarna and CashApp have facilitated money flow beyond what one would think possible.
Nowadays, you can finance things with money you may not have yet, pay for it in any currency and receive money instantly from anywhere in the world by just giving your email address.
Such a fast and secure system boosted the meteoric rise of online shopping. It allowed us to spend money much more carelessly and with ease.
According to this research from Visual Capitalist, Cyber Mondays net the US around $10 billion in extra revenue, with a 19% increase in one year alone. The data, collected in 2019, shows an upward trend that, despite a 1.4% hiccup in the past year, reached well over the $10.5 billion mark. What about overall sales? The numbers are enough to make your head spin. In 2021, online sales topped an astronomical $870 billion with US businesses alone.
But wait, it isn’t just transactions that have become more accessible. The real players in the eCommerce businesses are visual website builders and Content Management Systems such as WordPress and Shopify.
Removing the need for an expert web developer has allowed many to become eCommerce owners literally within a day or less.
This only got bigger during COVID.
COVID turned eCommerce from a luxury to a necessity for many.
COVID made everyone into an entrepreneur
A while ago, we discussed how budgeting was affected by COVID. Industries and niches changed around the pandemic, and most marketing budget allocation went instead to the digitalisation of practices and the production/installation of contact-free technologies.
COVID didn’t just shake the market around, but it allowed for a new wave of eCommerce giants to gain a solid base. COVID turned eCommerce from a luxury to a necessity for many.
After all, with everything closed, people had to become inventive to make some money, and eCommerce is only one of the many digital sectors that Covid has supercharged.
Trading stocks and cryptocurrencies and freelancing, for example, are just some of the most notorious examples of this occurrence.
However, websites such as Shopify enabled people to really become eCommerce owners practically overnight.
Wall Street Journal reports that Shopify’s profits have nearly doubled as a result of the pandemic, its shares have boomed during their Q3 earnings calls, and subscription-based earnings grew 28%.
Similarly, Etsy and WordPress have also seen a big benefit from the pandemic. Etsy grew by 400% as everyone tried their hand out at arts and crafts.
Although WordPress is a not-for-profit, so its earnings cannot be found online, the popular WordPress plugin WooCommerce has a bigger market share than Shopify, and according to this article from Webappick, more than $20 billion have been made using this in 2020 alone.
Online shopping growth in the UK
eCommerce growth in the UK mirrors the one seen in the United States. In the past three years, eCommerce has become a staple in the economy, and 87% of the entire population has made at least one online purchase, up from 78%.
Furthermore, the IT world has seen a huge rise, and the sale of mobile phones has increased to a 33.3 billion pounds market.
According to Statista, eCommerce is worth 700 billion pounds. The markets that grew the most are IT, general wholesale retail and, surprisingly enough, manufacturing, which also includes the production of large machinery parts and chemical/biological processing tools.
This shows that, whereas eCommerce is normally associated with small purchases on Amazon or third parties, it also has a huge potential for large business deals and more niche products that function as “gears” in the economy.
Recommended read: Increase your e-commerce sales tenfold with these 10 tips
What does the future hold for us?
Online shopping will never go away. We believe it has become a fundamental part of our daily lives and a vital part of the digital world itself.
It is inevitable that, due to the astonishing success of websites such as Etsy and Shopify, plenty of competitors (and copycats) will soon come to life, all bringing features and benefits to eCommerce owners and their customers.
The future of eCommerce is exciting but challenging. Everybody wants a slice of this cake, and as eCommerce becomes more and more accessible to everybody, the cake slices will only get thinner.
An oversaturated market where only a select few will survive?
An oversaturated cesspool of eCommerce is a threat to honest and quality websites that have the potential to make a fortune. Those small, family-owned shops will now have to compete against a plethora of antagonistic business owners who may have a larger budget than they to spend on marketing.
This spells diminished results on ad spend, and those providing services such as Pay Per Click and traditional advertisements will have to be able to niche down further and further to effectively target a smaller and more focused range of people.
Pay Per Click, in particular, is one of the victims of an oversaturated market, and as of 2022, it has become nearly 20% more expensive to get the same results one previously had.
If anything, these low returns may even mean that eCommerce owners should instead focus their efforts on improving customer experience and promoting brand loyalty through the use of subscriptions and other strategies we have included in previous articles.
SEO is perhaps the single most important strategy one could deploy to guarantee the success of their eCommerce. With the right budget and a decent time frame, it is possible to circumvent the limitations posed by the high competition.
Interested in SEO? Find out more about our bespoke SEO services.
Of course, it is unwise to think that SEO is a magical tool that will help you overcome all competition, but unlike most marketing strategies, its ability to target ultra-specific parts of an audience will prove fundamental to your eCommerce marketing.
We speak highly of SEO because of experience, but SEO is just one of the ways eCommerce owners can combat rising customer acquisition costs. Data gathering and Online Reputation Management will also benefit you significantly in order to deploy an effective marketing strategy.
Amazon alone owns 40% of the eCommerce market share.
Are we facing a monopoly?
Although starting an online side gig as an online retailer has never been easier, we can’t shy away from the fact that only 5 giants own around 50% of the entire market. Amazon alone owns 40% of the market share.
Are we heading towards a monopoly, or are we just speculating? Insider Intelligence forecasts the eCommerce market to increase to a $6 trillion industry by 2023.
Yet, monopolies are one of the world’s greatest problems today. Google, Amazon, Facebook and Microsoft are the most common examples of monopolies in the UK.
Although they are not eCommerce per se – with the exception of Amazon, of course -, they impact the lifecycle of any smaller businesses directly.
For example, it’s very difficult to emerge with an IT eCommerce that sells own-brand phones simply because Microsoft and Apple eat up such a large market share.
Therefore, the actions you can do as a small eCommerce owner are a bit more limited than you may have previously thought.
Fortunately, the abuse of monopoly power is illegal in the UK, and legislation is put in place to prevent power abuse.
Executing said legislations, however, is a whole different thing, and larger companies such as Amazon remain unsurmountable colossi that small eCommerce owners simply have to adapt to, rather than try to overcome.
Thriving as an eCommerce owner, therefore, is possible, but succeeding as a solopreneur may be an overwhelming experience.
eCommerce owners must simply adapt and take advantage of the technologies offered by the FAANG businesses. Most performance marketing services like SEO or PPC regularly take advantage of Google, for example, to grow and thrive.
And what about you? If you are an eCommerce business trying to stand from the ground, get in touch with our team and we’ll help you shine!
Key takeaways
- eCommerce as a market has been boosted by the Covid pandemic and shows no signs of slowing down. It is an industry that is expected to grow into a $5 trillion powerhouse in the next two years alone.
- It is also significantly more accessible than ever before, thanks to the birth of services such as Etsy, Shopify and plugin-powered WordPress (WooCommerce, for example).
- It is unfortunately a very saturated market as of today, largely owned by a select few.
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