3 Reasons Online Shopping Is Huge (And Not Just on Cyber Monday)

Believe the hype about e-commerce growth and potential

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Cyber Monday is in a unique situation, as the popular online shopping day is becoming more important and less important at the same time.

On the one hand, Cyber Monday continues to grow in size. Adobe Systems (ADBE) predicts that today’s total Cyber Monday 2013 sales should hit nearly $2.3 billion, which would mean the highest online sales in history.

But online shopping is increasing in popularity across the board, making Cyber Monday par for the course as opposed to special. Sure, countless bargain-hunters are tracking the best Cyber Monday deals today … but e-commerce was also the modus operandi for a good chunk of the early-bird bargain-hunters that began their prowl on Thanksgiving and Black Friday.

Adobe actually predicted record e-commerce days not just for Cyber Monday 2013, but for Thanksgiving, Black Friday and the overall shopping season. And so far, online shopping has been off to a hot start. Bloomberg noted that online sales boomed by 20% on Thanksgiving and 19% on Black Friday 2013 vs. a 2.3% gain at brick-and-mortar stores … adding that increased online shopping could have been part of the reason foot traffic actually declined on Friday.

Screen Shot 2013 12 01 at 1.30.36 PM 3 Reasons Online Shopping Is Huge (And Not Just on Cyber Monday)
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Of course, just as increased online shopping during the holidays is hardly exclusive to Cyber Monday, increased e-commerce overall is hardly exclusive to the holiday months. As you can see in the chart to the right, e-commerce sales have been growing at a steady clip for the past decade.

This is where things get interesting, though. While the clear upward march for e-commerce didn’t surprise me when I saw this chart, the actual percentage did — especially considering all the hype around online shopping. In the third quarter of the year, e-commerce sales represented just 5.9% of total retail sales on seasonally adjusted basis.

Sure, that’s a solid percentage point higher than the year-ago period and triple the percentage of a decade ago. Plus, the growth has taken place as overall sales chug higher. But 6% hardly sounds dramatic — especially when we so often hear about the “explosion” of e-commerce and how names from Walmart (WMT) to Staples (SPLS) to JCPenney (JCP) to Target (TGT) are all trying to improve their online shopping status.

If we dig a little deeper, though, several factors explain why we should believe the hype about e-commerce for Cyber Monday 2013, the entire holiday shopping season and years beyond … despite the fact that it remains a sliver of the pie.

Here are three such factors that help explain why the percentage of online sales is still relatively low now … and why it will keep growing.


Article printed from InvestorPlace Media, http://investorplace.com/2013/12/cyber-monday-2013-online-shopping/.

©2014 InvestorPlace Media, LLC

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