Repost from Benedict Evans
Benedict Evans
ecommerce
Instacart /
Instacart is planning an IPO. Right now the company is valued at $14B. What an amazing world we live in where you can build a business like Instacart in 5 years! Instacart today partners with more than 500 national, regional and local retailers, for nearly 40,000 stores across more than 5,500 cities. You need stores to make Instacart work - there is no retail apocalypse!
Larry Paige /
I said to
Larry Paige…
"I fix networks, the real ones, not the online ones, we call them "shopping centers"
Larry Paige, the founder of Google once asked me what I did at a TED conference. I said, "I fix networks, the real ones, not the online ones, we call them "shopping centers" and they are the lifeblood of the US economy and its consumers." "That's cool." he said.
2020 Top 10 U.S Retail E-commerce Companies /
Today nearly 15% of all US retail sales are from e-commerce. Our forecast is that by 2030, nearly 30% of retail sales will be generated on-line. This transformation from a brick and mortar economy to an omni-channel model will vastly improve the customer experience. It will also require massive investment, innovation, training and retooling. Soon we will all live like the Jetsons. Change is good.
Here is e-Marketer’s listing of the 2020 top 10 U.S retail e-commerce companies ranked by sales.
Amazon: $309.58
Walmart: $46.20
eBay: $38.61
Apple: $27.51
The Home Depot: $16.71
Best Buy: $15.70
Target: $13.82
Wayfair: $11.66
Kroger: $11.28
Costco: $11.18
Figures are in Billions.
Grocery Store Growth /
Aldi now has over 2,000 US stores, which is the third most grocery stores in the US. Amazon's Whole Foods has 500 stores. Now, Amazon is rolling out Amazon Fresh which is expected to be a game changer for the US grocery marketplace. The largest retailer Walmart has basically stopped adding US stores and is instead focusing is domestic expansion efforts on its e-commerce platform for delivery and curbside pick up. Please watch this two minute video of Walmart's US expansion to get an idea of just how fast Aldi and Amazon can grow their US base - it will blow your mind. New cool things are always coming. There is no retail apocalypse. Simba beats Scar!
US Retail Growth /
US retail sales grow occurs at a steady rate of 3.75% annually. Half the growth is from inflation and the balance is in volume. Over the next 10 years, all of the volume gains will be from the e-commerce component which today, is 15% of the total. The brick and mortar component will remain flat for the foreseeable future. Thus, the US retail system doesn’t need any new brick and mortar space until about 2030. At that time e-commerce will account for 30% of sales.
That’s why Walmart stopped building new stores and made massive investments in their e-commerce platform.
Focus on the facts and do not follow your gut. Onward!
The auto parts industry is a good example of a 50/50 business /
What does retail look like when half the sales occur in the store and rest are on-line? The auto parts industry is a good example of a 50/50 business. As retailers embrace a multi-channel sales model the consumer benefits from better prices, greater convenience, and selection. Don’t panic, the world is changing, and it will be a much better place. There is no retail apocalypse.
Oh my god, all my weight gain is in my right arm – The E-commerce Story /
For the next 10 years the US does not need any new retail space. Retail sales in the US have grown steadily by 3.75% annually. Over 10 years, at that rate, retail sales grow by 40%. Half of that gain is due to inflation or just raising prices. The other half is volume growth and that’s what really matters.
Over the last 5 years, a strange thing happened. All the retail volume gains occurred in the e-commerce space. It’s like a person who is gaining weight each year by 2%, but all their weight gain is in their right arm. It’s just weird to watch all the volume gains occurring in e-commerce, but that’s the reality.
For example, 2019 e-commerce was 15% of retail sales and it grew by about 15%. In other words, it added 2.25% which was all the volume growth. E-commerce’s growth rate is slowing, but it’s still accounting for all the volume growth. In a few years, e-commerce will be 20% of retail sales and its growth will have slowed to about 12%. Do the math it’s still 2.4% or all the volume growth.
During the last few years, almost all retailers’ volume gains occurred in deliveries, curbside pick up and in shipping. In other words, all the volume growth came from the “back door” and the volume out the “front door” was unchanged. For the foreseeable future, there will be no additional dinners sold inside your favorite restaurant and no more shoppers at your local grocery store even if your town’s population is growing. Those stores sales will grow, but it will all happen out the “back door”.
It’s no surprise that Walmart stopped adding stores in many key markets recently and instead made massive investments in their “back door” e-commerce platform. Other retailers followed: Target spend $550M to buy Shipt, McDonalds spent $300M to buy a geo-fencing platform. Still, because of high delivery costs, all the profits are coming from the front door where the profit margins average 8%. Warehouse, labor and delivery cost and rising rapidly and it is very difficult to make any profit from e-commerce sales. And so, it’s no surprise that the King of the Back Door, Amazon, is embarking on a massive store expansion with its Amazon Fresh stores. The profits are from the in-store sales, but all the growth is happening out the “back door”.
By 2030, it will all be over. Most retail businesses will get 25-30% of their sales from e-commerce. They will all have cool apps, frictionless check outs, one-hour delivery and so on. Ecommerce growth and brick and mortar growth will equalize and once again, we will need more retail space to accommodate the growth. Until then we don’t need anymore retail space in the US, we just need to repurpose what we already have.