1、CRITICAL THINKING AT THE CRITICAL TIME The U.S. Online Retail Forecast FTI Consulting, Inc.1 October 2015 A, the pioneer in online retailing, celebrated its 20th anniversary this past July, and such a momentous occasion merits some reflection. When it opened its virtual doors in 1995, Amazon called

2、itself the Earths Biggest Bookstore. Internet usage among U.S. adults back then was 14% compared with 87% currently according to the Pew Research Center. Today, Amazons domestic sales are $51 billion, making it the ninth largest U.S. retailer. Its success is an ever-present reminder that the online

3、channel has revolutionized retailing. But this anniversary also reminds us that despite its spry appearance, online shopping has hit middle age not in the sense of longevity but in its potential to capture market share at extraordinary rates. Overall, online sales growth remains strong but is decele

4、rating Exhibit 1 as are market share gains. Both are evidence of a slowing, which invariably accompanies middle age and which will become more apparent over the next few years. We expect U.S. online sales to hit $340 billion this year and $380 billion in 2016 (compared with $300 billion last year) a

5、nd eventually reach $550 billion in 2020 a compound annual growth rate of 10.6% with online market share of retail sales approaching 17% by the end of the decade compared with 10% in 2014. Make no mistake about it; These are impressive growth figures considering how large the online retail channel a

6、lready has become, but these numbers also reflect the realities of a medium that is maturing. The majority of large, store-based retailers have demonstrated they can build a thriving online business. In reality, most of these sales are coming at the expense of their own stores, and the incremental i

7、mpact of the online channel on total sales and profitability is much less clear. The challenge ahead for retailers is to move beyond the single-minded purpose of generating online traffic and sales at any cost and to ensure that their online business is improving the return on investment of the enti

8、re enterprise. If not, then these sizable investments and efforts are arguably just an additional cost of doing business rather than a veritable growth strategy. Exhibit 1 U.S. Online Retail Sales Source: 2005 - 2014 Online Retail Sales LHS: U.S. Census Bureau 2015 - 2020 Online Retail Sales LHS: FT

9、I Consulting, Inc. Online Growth online retail sales of goods are consistently growing at nearly five times the rate of store-based sales. Exhibit 2 Exhibit 2 U.S. Online Retail Sales Growth As for market share, overall U.S. online sales hit the 10% mark of relevant retail sales (excluding auto, gas

10、 and restaurants) in 2014 and now hover just above 10.5% Exhibit 3. Online market share gains currently are running just above one percentage point annually, though this will gradually slow over the next few years. However, we emphasize that online market share varies significantly by product catego

11、ry, with several leading categories at 20% or more Exhibit 4, while lagging categories are in the low-to-mid single digits. Apparel remains the largest online product category with nearly $50 billion of sales last year, accounting for a 17.5% market share of apparel sales and nearly 17% of all onlin

12、e sales of goods, much to the surprise of early skeptics who doubted the categorys potential for online success. Consumers have shown few qualms about buying apparel online despite the gamble on proper fit and the frequency of returns and exchanges. Online market share in some other product categori

13、es is larger than apparels market share, but apparel still is the most important category due to its sheer sizewith approximately $300 billion in total retail sales. However, apparels most impressive growth years likely have passed, and its online growth rate will be tailing off over the next few ye

14、ars, while other product categories will be doing the heavy lifting in driving sales gains. The other end of the online spectrum is food and grocery, which, despite being one of the first product categories to be offered online way back in the 90s, barely has cracked a 1% market share. (You may reca

15、ll that Peapod, one of the earliest e-commerce startups, launched its website in 1996.) Grocery continues to be the category that consumers have not embraced for online purchases, though it is not for lack of trying on the part of retailers. Amazon and others recently have stepped up efforts to win

16、over grocery shoppers, but it is too soon to know how successful these programs will be and whether they can move the needle with respect to online market share for the category. Exhibit 3 U.S. Online Retail Sales and Market Share Exhibit 4 Online Market Share of Select Product Categories Source: U.

17、S. Census Bureau -10% -5% 0% 5% 10% 15% 20% 25% 30% Store-Based Sales Growth Online Sales Growth 1Q2015 1Q2014 1Q2013 1Q2012 1Q2011 1Q2010 1Q2009 1Q2008 1Q2007 1Q2006 1Q2005 YOY% change Source: U.S. Census Bureau Note: Market share estimate excludes automobile and gasoline retail sales. $0 $10 $20 $

18、30 $40 $50 $60 $70 $80 $90 Quarterly Online Sales 0% 2% 4% 6% 8% 10% 12% Online Market Share 1Q2015 1Q2014 1Q2013 1Q2012 1Q2011 1Q2010 1Q2009 1Q2008 1Q2007 1Q2006 1Q2005 1Q2004 1Q2003 1Q2002 1Q2001 1Q2000 in billions Source: FTI Consulting, Inc. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% GroceryHome

19、Furnishings ApparelSporting Goods Consumer ElectronicsToy stretched and elongated (slow adoption) or sharp and upright (fast adoption). Regardless of its particular shape, the S-curve has two noteworthy characteristics. It is a function that increases over the entirety of its curve, initially at an

20、increasing amount (concave up) and then at a decreasing amount (concave down) until growth becomes negligible. Most notably, these two halves of the S are symmetrical about the curves inflection point; that is, the middle of the S where concavity changes from upward to downward. This is a very conve

21、nient property as it allows us to know the entirety of the curve even if we have observed only one-half of it (or slightly less) which we certainly have. The U.S. Census Bureau has published online retail sales estimates in about a dozen product categories since 1999. From these time series data, we

22、 can estimate online market share for these categories since inception. We then can derive an appropriate S-curve equation for each market share and use these equations to project online sales and market share in the years ahead. The accumulation of online market share estimates for the past 15 year

23、s coupled with the suitability of the S-curve model to describe online market share give us confidence in the accuracy of the forecasts derived from these equations. We have taken the dozen or so specific product categories for which we have estimated historical market share and grouped them into br

24、oad categories based on their market share performance to date Appendix Exhibit 1. We then derived unique S-curve equations for each of these categories from the historical data series, and these equations became the basis our forecast. The High Penetration category Appendix Exhibit 1 includes books

25、 and music (among others), two of the earliest online categories to see widespread adoption by consumers. These product categories now are mature (i.e., high online market share) but relatively small in dollar amounts. The Lowest Penetration category is food and grocery, which despite being one of t

26、he first online categories back in the late 90s never has gained traction with shoppers. It is an enormous category ($600+ billion) that never will achieve sizable online market share based on the S-curve derived from our observed data. But the grocery category itself is so large that even small mar

27、ket share gains can translate into large sales volumes moving online. Despite the best efforts of Amazon and others to make inroads in grocery, we remain skeptical of aggressive forecasts for the category: Our derived S-curve for grocery has market share potential topping out at approximately 2.5% f

28、rom about 1.2% currently. All other product categories fall within the middle three categories of Medium Penetration 2 and Low Penetration, and these categories are producing the lions share of online sales growth. Appendix Exhibit 1 Historical Online Market Share of Product Category Groupings Sourc

29、e: FTI Consulting, Inc. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Low Penetration Medium Penetration 2 Medium Penetration 1 High Penetration 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 CRITICAL THINKING AT THE CRITICAL TIME The U.S. Online Retail Forecast FTI Consulting, Inc.5

30、Appendix Exhibit 2 Projected Online Market Share of Product Category Groupings Appendix Exhibit 3 Projected Online Market Share Growth Amount Appendix Exhibit 4 Pct. of Online Market Share Potential Realized Source: FTI Consulting, Inc. 0% 10% 20% 30% 40% 50% 60% Lowest Penetration Low Penetration M

31、edium Penetration 2 Medium Penetration 1 High Penetration 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Source: FTI Consulting, Inc. 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Lowest Penetration Low Penetration Medium Penetration 2 Medium Penetratio

32、n 1 High Penetration 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Source: FTI Consulting, Inc. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Lowest Penetration Low Penetration Medium Penetration 2 Medium Penetration 1 High Penetration 2020 2019 20

33、18 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 The U.S. Online Retail Forecast About FTI Consulting FTI Consulting is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal

34、, regulatory and economic environment. FTI Consulting professionals, who are located in all major business centres throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions,

35、 regulatory issues, reputation management and restructuring. 2015 FTI Consulting, Inc. All rights reserved.001235 Authors Robert J. Duffy Global Segment Leader Corporate Finance/Restructuring 1 617 897 1501 Stephen L. Coulombe Senior Managing Director Retail and Consumer Products 1 617 897 1500 Christa Hart Senior Managing Director Retail and Consumer Products 1 212 247 1010 Keith Jelinek Senior Managing Director Retail and Consumer Products 1 617 897 1500 John Yozzo Managing Director Corporate Finance/Restructuring 1 212 499 3624