Which Retail Sectors are growing the most online?

According to US Department of Commerce (DOC) estimates, online sales represent a minuscule percentage of overall retail sales. In 2007, only 3.2% of total retail sales took place on the Internet.

Of course, large categories where e-commerce has hardly made a dent—such as autos, gasoline and groceries—skew the results.

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The DOC data illuminates a seasonal trend: Online sales penetration is greatest in Q4. A likely reason for this is that the benefits of e-commerce—convenience, broad selection, cost savings, free shipping and avoiding crowded malls—shine brightly during the holiday shopping season.

Forrester Research used its own proprietary formula in May to estimate that e-commerce will represent 7% of retail industry sales in 2008.

Even some of the categories with online sales penetration rates that exceed the industry’s 7% rate still have strong growth potential. Forrester estimated that 20% of consumer electronics sales will take place online this year. Other Forrester data showed that online sales in this large category could grow to 29% of total sales by 2012.

Moreover, some of the least-penetrated categories such as auto/auto parts (2% penetration) and food, beverage and grocery (1% penetration) nevertheless generate respectable online sales.

Take groceries, for example. Many of the early problems that plagued online grocers are being addressed today through innovative business models. In this light, the fact that most groceries are still sold offline could be viewed as an opportunity for online food merchants who can figure out how to lure customers from physical stores.

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