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Happy Holidays: Retail Revenue Through the Years
By Neil A. Carousso
It’s the most wonderful time of the year, when people wait on long lines, argue with people over parking spaces and spend a lot of money on presents.
In 2013, revenue earned from retail shopping in the United States totaled $3.08 trillion. Of that revenue, $62.11 billion was earned via e-commerce. Certainly, e-commerce is on the rise; it’s a convenient way to avoid crowded stores and the wait on long lines. Online retail this holiday season is expected to jump over $10 billion since last year.
However, even with all the Black Friday hype, reports indicated that Thanksgiving holiday sales fell 11 percent. It can indicate a lackluster spending season, but it’s also an indicator that U.S. households could be saving as much as $1,100 a year, if current gas prices maintain.
Revenues for the past 6 holiday seasons has been steady, only increasing $350 million compared to online retail increasing $40.8 billion since 2007. This is a testament to booming e-commerce.
While this draws positives for many retailers, because the Internet is a worldwide avenue to market and sell products, it can also be a nightmare for traditional retailers. The Wall Street Journal reports that because most major retailers are investing heavily in e-commerce, many are closing physical stores. In addition, many retailers are loosing money online due to shipping and packaging costs as well as higher rates of returns. Costs can be as high as 25 percent of sales for retailers that outsource their e-commerce operations, according to industry analysts, who told The Journal.
For example, Wal-Mart Stores, Inc. says it may loose money online through 2016 as a result of cost of technology plus infrastructure. In order to minimize the losses, some companies, have set a minimum purchase amount for online purchases to qualify for free shipping. Wal-Mart has set theirs at $50. Moreover, many customers expect retailers to pay for shipping costs, according to Deloitte’s 2014 holiday survey.
E-commerce accounts for one-tenth of U.S. retail sales, but that share is growing rapidly.
