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Online Shopping - US - June 2010

The explosive growth of e-commerce hit a wall in 2009, as consumers pulled back in all areas of retail. Shoppers turned to the Internet for bargains, but the consumer base for e-commerce remained flat. While sales increased substantially in the first quarter of 2010, the macroeconomic future is cloudy at best, suggesting potentially slower growth than what has historically been an achieving segment. In this environment, success is not assured—some categories and retailers will continue to post strong sales growth, while the fates of weaker retailers are less than certain. Near-term growth can no longer depend on growing adoption and will have to come from higher spend per customer, or increases in market share within an increasingly competitive market.

In this exclusive report, Mintel takes a look at how e-commerce dynamics and consumer attitudes toward online purchase are changing. Analysis and insights will answer the following questions:

  • Which segments of e-commerce performed better during the recession?
  • What makes Amazon so successful?
  • Which initiatives are driving sales growth?
  • Which forms of lead generation are increasing in effectiveness?
  • Which innovations are shaping mobile commerce and the future of online retail?
  • What are the key motivations behind online purchases, other than low prices?
  • How comfortable are consumers making large purchases online?
  • What barriers and limitations remain to higher adoption?
  • How prevalent is price comparison and how is it used?
  • What are the key demographics for web retailers to target?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • E-commerce still grows in recession
                        • Electronics the most resilient product category
                          • Consumers warm to e-commerce and value its convenience
                            • Sales tax advantage in jeopardy
                              • Amazon leads e-commerce with strong value propositions
                                • Other major retailer brands strategize to catch Amazon
                                  • Retailers increase focus on lead generation
                                    • Television ads push lifestyle, gifting
                                      • E-commerce adoption skews with gender, age, and household income
                                        • Key demographic for e-commerce: 25-34-year-olds
                                          • Decreased concern over using personal information to make purchases
                                            • Price comparison users are fragmented among multiple sites
                                              • Mobile shopping still in infancy
                                                • Developers innovate as smartphone penetration rises
                                                • Inspire Insights

                                                  • Transparency
                                                    • What's it about?
                                                      • What we've seen
                                                        • Specifics
                                                          • Impact: Personalization and targeting require consumers to share
                                                            • Over-Optioned Consumers
                                                              • What's it about?
                                                                • What we've seen
                                                                  • Impact
                                                                  • Insights and Opportunities

                                                                    • Over-55s
                                                                      • Figure 1: Popularity of online retailers, by age, March 2010
                                                                      • Figure 2: Usage of checkout services, by age, March 2010
                                                                      • Figure 3: Internet usage, by age, May 2008 and April 2009
                                                                    • Convenience, the long-term focus
                                                                      • Mega-retailers to evolve into product search engines
                                                                      • Market Size and Forecast

                                                                        • Market still growing through recession
                                                                          • Figure 4: Total U.S. e-commerce retail sales, 2004-14
                                                                          • Figure 5: Total U.S. e-commerce retail sales, at inflation-adjusted prices*, 2004-14
                                                                      • Competitive Context

                                                                        • Key points
                                                                          • Online share growing but adoption may see a plateau
                                                                            • Figure 6: E-commerce sales as a percentage of total retail, 2001-10
                                                                          • Web-only retailers growing faster than retail chain web sales
                                                                            • Figure 7: Online sales of top 500 sites, by type of retailer, 2007 and 2009
                                                                          • Decreasing interest in wish lists, but interest in gift cards on the rise
                                                                            • Figure 8: Attitudes toward online gift shopping, February 2009 and March 2010
                                                                        • Segment Performance

                                                                          • Key points
                                                                            • Electronics, recorded entertainment, toys post large gains in recession
                                                                              • Figure 9: U.S. e-commerce sales at electronic shopping/mail order houses, by type of merchandise, 2007 and 2008
                                                                            • E-shoppers make purchases in fewer categories in 2009
                                                                              • Figure 10: Categories of internet purchase, 2006-09
                                                                          • Leading Retailers

                                                                            • Key points
                                                                              • Amazon far in the lead
                                                                                • Lower prices
                                                                                  • Shipping charges
                                                                                    • Widest selection of products
                                                                                      • Convenience
                                                                                        • Staples outperforms with a focus on small business customers
                                                                                          • Walmart takes aim at Amazon with aggressive pricing
                                                                                            • Apple’s web traffic pushes it to fourth place
                                                                                              • Figure 11: Sales and related statistics of top ten internet retailers, 2009
                                                                                            • Amazon receives monthly business from a third of e-shoppers
                                                                                              • Figure 12: Popularity of online retailers, March 2010
                                                                                            • Youngest respondents 18-24 show greater skew toward Amazon and eBay
                                                                                              • Figure 13: Popularity of online retailers, by age, March 2010
                                                                                            • Value-oriented brands see lower traffic from $100K+ respondents
                                                                                              • Figure 14: Popularity of online retailers, by household income, March 2010
                                                                                            • eBay rebrands as fixed-price vendor of new merchandise
                                                                                            • Innovation and Innovators

                                                                                              • Mobile app developers innovate as smartphone penetration rises
                                                                                                • Hardware
                                                                                                  • Software
                                                                                                    • Conversion rates improved through personalized site navigation
                                                                                                      • Overstock promotes local business
                                                                                                        • Social shopping sites target women who share trends
                                                                                                          • Other social sites harness the power of group buying
                                                                                                          • Television Advertising

                                                                                                            • Top e-commerce brands place emphasis on customer lifestyles
                                                                                                              • Figure 15: Amazon—Diverse Customers, December 2009
                                                                                                              • Figure 16: eBay—Chevy Motors, August 2009
                                                                                                            • General merchandiser sites incorporate theme of gift giving
                                                                                                                • Figure 17: Zappos—Gift Exchange, March 2010
                                                                                                                • Figure 18: Overstock—Dad Knows Best, May 2010
                                                                                                              • Vendors of groceries and apparel reach out to family demographic
                                                                                                                • Figure 19: Peapod—Frantic Family, March 2010
                                                                                                                • Figure 20: JCPenney—Kids Matter, August 2009
                                                                                                            • Online Promotion

                                                                                                              • Key points
                                                                                                                • Web retailers rely on lead generation for traffic
                                                                                                                  • Email
                                                                                                                    • Price-comparison sites
                                                                                                                      • Search engines
                                                                                                                        • Improved targeting helps display ads make a comeback
                                                                                                                          • Targeting improves through tracking web behavior
                                                                                                                            • More respondents across the board click on display ads
                                                                                                                              • Figure 21: Clicking on internet ads, by various demographic factors, February 2009 and March 2010
                                                                                                                            • Limited appetite for social network marketing
                                                                                                                              • Figure 22: Attitudes toward online promotions and coupons, March 2010
                                                                                                                          • Market Drivers

                                                                                                                            • Consumer confidence undermined by high unemployment and foreclosures
                                                                                                                                • Figure 23: Consumer confidence and U.S. unemployment rate, January 2008-May 2010
                                                                                                                              • Decline in revolving credit puts pressure on consumer expenditures
                                                                                                                                  • Figure 24: Outstanding consumer credit, January 2008-May 2010
                                                                                                                                • Convenience is internet’s top value proposition
                                                                                                                                  • Figure 25: Motivations behind online shopping, March 2010
                                                                                                                                • Consumers warm to e-commerce for broader range of purchases
                                                                                                                                    • Figure 26: Barriers to online purchase, February 2009 and March 2010
                                                                                                                                  • Free shipping encourages more regular purchases
                                                                                                                                    • States move to collect sales tax on online purchases
                                                                                                                                      • Broadband access
                                                                                                                                        • Smartphone ownership
                                                                                                                                        • Usage

                                                                                                                                          • Key points
                                                                                                                                            • Recession stalls growth of online consumer base in 2009
                                                                                                                                              • Figure 27: Incidence of internet purchase, 2006-09
                                                                                                                                            • Penetration skews female, younger, and higher income
                                                                                                                                              • Figure 28: Incidence of internet purchase, by various demographic factors, 2008 and 2009
                                                                                                                                            • Online spending is both routine and significant in dollar amount
                                                                                                                                              • Convenience of internet also facilitates in-person purchases
                                                                                                                                                • Figure 29: Type and frequency of purchases made, March 2010
                                                                                                                                              • Key demographic for e-commerce: 25-34-year-olds
                                                                                                                                                • Figure 30: Type and frequency of purchases made, by age, March 2010
                                                                                                                                            • Motivations

                                                                                                                                              • Key points
                                                                                                                                                • Price savings, lack of local availability decline in importance
                                                                                                                                                  • Convenience central driver
                                                                                                                                                    • Figure 31: Motivations behind online shopping, February 2009 and March 2010
                                                                                                                                                  • Convenience more important than low prices for over-35s
                                                                                                                                                    • Figure 32: Motivations behind online shopping, by age, March 2010
                                                                                                                                                  • Female-oriented sites would benefit from wish lists and wide selection
                                                                                                                                                    • Figure 33: Motivations behind online shopping, by gender, March 2010
                                                                                                                                                • Reasons Not to Shop Online

                                                                                                                                                  • Key points
                                                                                                                                                    • Key reasons for not shopping online not diminished
                                                                                                                                                      • Figure 34: Reasons not to shop online, February 2009 and March 2010
                                                                                                                                                    • Shipping charges more likely to deter women
                                                                                                                                                      • Figure 35: Reasons not to shop online, by gender, March 2010
                                                                                                                                                    • Older shoppers more resistant to purchasing remotely and shipping fees
                                                                                                                                                      • Figure 36: Reasons not to shop online, by age, March 2010
                                                                                                                                                    • Lower-income respondents may be less willing to take online risk
                                                                                                                                                      • Figure 37: Reasons not to shop online, by household income, March 2010
                                                                                                                                                  • Comfort with Online Shopping

                                                                                                                                                    • Key points
                                                                                                                                                      • Increasing comfort with online shopping leading to more purchases
                                                                                                                                                          • Figure 38: Comfort with online shopping, February 2009 and March 2010
                                                                                                                                                        • Under-35s more concerned about delivery times
                                                                                                                                                          • Figure 39: Comfort with online shopping, by age, March 2010
                                                                                                                                                        • Highest earners more willing to try unfamiliar web stores
                                                                                                                                                          • Figure 40: Comfort with online shopping, by household income, March 2010
                                                                                                                                                      • Role of Online Reviews

                                                                                                                                                        • Reviews represent a strategic draw
                                                                                                                                                          • Figure 41: Attitudes toward online product feedback, by household income, March 2010
                                                                                                                                                      • Mobile Shopping

                                                                                                                                                        • Key points
                                                                                                                                                          • Mobile shopping still limited to early adopters
                                                                                                                                                            • Figure 42: Attitudes toward mobile shopping, March 2010
                                                                                                                                                          • 25-34-year-olds, higher earners most likely to use phones for shopping
                                                                                                                                                            • Figure 43: Attitudes toward mobile shopping, by age, March 2010
                                                                                                                                                            • Figure 44: Attitudes toward mobile shopping, by household income, March 2010
                                                                                                                                                        • Price-comparison Sites

                                                                                                                                                          • Key points
                                                                                                                                                            • Price comparison users are fragmented among multiple sites
                                                                                                                                                              • Figure 45: Popularity of price-comparison sites, March 2010
                                                                                                                                                            • Men more likely to use price-comparison sites
                                                                                                                                                              • Figure 46: Popularity of price-comparison sites, by gender, March 2010
                                                                                                                                                            • 25-34-year-olds are key demographic for price-comparison sites
                                                                                                                                                              • Figure 47: Popularity of price-comparison sites, by age, March 2010
                                                                                                                                                            • Higher-income household members sophisticated at price comparison
                                                                                                                                                              • Figure 48: Popularity of price-comparison sites, by household income, March 2010
                                                                                                                                                          • Checkout Services

                                                                                                                                                            • Online payment usage follows from frequency of purchase
                                                                                                                                                              • Figure 49: Usage of checkout services, by gender and age, March 2010
                                                                                                                                                            • PayPal remains dominant provider of checkout services
                                                                                                                                                              • Figure 50: Popularity of checkout services, by age, March 2010
                                                                                                                                                          • Race and Hispanic Origin

                                                                                                                                                            • Key points
                                                                                                                                                              • Skew in online adoption strongly linked to income disparity
                                                                                                                                                                • Figure 51: Incidence of internet purchase, by race/Hispanic origin, 2009
                                                                                                                                                              • Asians early adopters but financially risk-averse
                                                                                                                                                                • Figure 52: Comfort with online shopping, by race/Hispanic origin, March 2010
                                                                                                                                                              • Online Asians and Hispanics more likely users of price-comparison sites
                                                                                                                                                                • Figure 53: Popularity of price-comparison sites, by race/Hispanic origin, March 2010
                                                                                                                                                              • Asian respondents more active in searching for online coupons
                                                                                                                                                                • Figure 54: Attitudes toward online promotions and coupons, by race/Hispanic origin, March 2010
                                                                                                                                                              • Asians and Hispanics more likely to adopt cell phone commerce
                                                                                                                                                                • Figure 55: Attitudes toward mobile shopping, by race/Hispanic origin, March 2010
                                                                                                                                                            • Cluster Analysis

                                                                                                                                                                • Incidentalists
                                                                                                                                                                  • Demographics
                                                                                                                                                                    • Characteristics
                                                                                                                                                                      • Opportunity
                                                                                                                                                                        • Intentionals
                                                                                                                                                                          • Demographics
                                                                                                                                                                            • Characteristics
                                                                                                                                                                              • Opportunity
                                                                                                                                                                                • Demographics
                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                      • Cluster characteristics
                                                                                                                                                                                        • Figure 56: Online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 57: Attitudes and behavior toward online shopping, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 58: Attitudes toward online coupons, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 59: Attitudes toward online wish lists, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 60: Comfort with online shopping, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 61: Use of checkout services, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 62: Use of online feedback and reviews, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 63: Interest in cell phone shopping, by online shopping clusters, March 2010
                                                                                                                                                                                        • Figure 64: Motivations for shopping online, by online shopping clusters, March 2010
                                                                                                                                                                                      • Cluster demographics
                                                                                                                                                                                        • Figure 65: Online shopping clusters, by gender, March 2010
                                                                                                                                                                                        • Figure 66: Online shopping clusters, by age, March 2010
                                                                                                                                                                                        • Figure 67: Online shopping clusters, by household income, March 2010
                                                                                                                                                                                        • Figure 68: Online shopping clusters, by race, March 2010
                                                                                                                                                                                        • Figure 69: Online shopping clusters, by Hispanic origin, March 2010
                                                                                                                                                                                      • Cluster methodology
                                                                                                                                                                                      • Custom Consumer Groups

                                                                                                                                                                                        • Gender and age
                                                                                                                                                                                            • Figure 70: Type and frequency of purchases made, by gender and age, March 2010
                                                                                                                                                                                            • Figure 71: Motivations behind online shopping, by gender and age, March 2010
                                                                                                                                                                                            • Figure 72: Reasons not to shop online, by gender and age, March 2010
                                                                                                                                                                                            • Figure 73: Selected attitudes toward online shopping, by gender and age, March 2010
                                                                                                                                                                                            • Figure 74: Attitudes toward mobile shopping, by gender and age, March 2010
                                                                                                                                                                                        • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                          • Motivations
                                                                                                                                                                                              • Figure 75: Motivations behind online shopping, by household income, March 2010
                                                                                                                                                                                            • Comfort with online shopping
                                                                                                                                                                                              • Figure 76: Comfort with online shopping, by gender, March 2010
                                                                                                                                                                                            • Popularity of online retailers
                                                                                                                                                                                              • Figure 77: Popularity of online retailers, by gender, March 2010
                                                                                                                                                                                            • Shopping with cell phones
                                                                                                                                                                                              • Figure 78: Attitudes toward shopping with cell phones, by gender, March 2010
                                                                                                                                                                                            • Checkout services
                                                                                                                                                                                              • Figure 79: Use of checkout services, by household income, March 2010
                                                                                                                                                                                          • Appendix: Trade Associations

                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                            • AOL
                                                                                                                                                                                            • Barnes & Noble, Inc
                                                                                                                                                                                            • Best Buy Co.
                                                                                                                                                                                            • Dell Inc.
                                                                                                                                                                                            • Facebook, Inc.
                                                                                                                                                                                            • Federal Communications Commission (FCC)
                                                                                                                                                                                            • Google, Inc.
                                                                                                                                                                                            • Hugo Boss
                                                                                                                                                                                            • J C Penney Company, Inc
                                                                                                                                                                                            • Macy's, Inc.
                                                                                                                                                                                            • National Retail Federation (NRF)
                                                                                                                                                                                            • New York & Company Inc.
                                                                                                                                                                                            • NexTag, Inc.
                                                                                                                                                                                            • Nike
                                                                                                                                                                                            • Office Depot (North America Retail)
                                                                                                                                                                                            • Overstock.com Inc.
                                                                                                                                                                                            • PayPal Inc.
                                                                                                                                                                                            • Starbucks Corporation
                                                                                                                                                                                            • Target Corporation
                                                                                                                                                                                            • The Conference Board
                                                                                                                                                                                            • Twitter, Inc.
                                                                                                                                                                                            • U.S. Bureau of Labor Statistics
                                                                                                                                                                                            • US Department of Commerce
                                                                                                                                                                                            • Walmart Stores (USA)
                                                                                                                                                                                            • Yahoo! Inc
                                                                                                                                                                                            • Zappos.com Inc.

                                                                                                                                                                                            Online Shopping - US - June 2010

                                                                                                                                                                                            US $3,995.00 (Excl.Tax)