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Online Shopping - US - May 2009

Total sales generated by e-commerce have grown explosively over the last five years. Though economic growth has been flattened by the recession, online retail still shows more signs of life during recession than consumer retail as a whole. In this report, Mintel examines the value propositions that compel consumers to increasingly adopt online purchasing:

  • What makes category leaders successful
  • Which online retail segments are growing the fastest
  • How do web-only retailers compare with branded chain retailers online
  • How advertising of retailing sites has evolved

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Table of contents

  1. Scope and Themes

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

                    • Explosive growth in online retail curbed by recession
                      • Fastest-growing categories not tech-related
                        • Amazon leads online retail by large gap
                          • Web-only retailers benefit from increasing consumer comfort
                            • Growth in online shopping driven by multiple key value propositions
                              • E-retailers focus on internet-based advertising strategies
                                • Shipping fees and privacy primary barriers to adoption
                                  • Early adopters on board for mobile shopping
                                    • E-commerce continues to evolve through innovation
                                    • Inspire Insights

                                      • Trends
                                        • How trends will impact the market
                                        • Insights and Opportunities

                                          • Retailer must differentiate on factors other than price and familiarity
                                            • Emotional branding increasingly important in price-competitive market
                                              • Cell phone commerce in early adoption
                                                • TV becomes a purchasing tool
                                                  • Women value the internet for selection and availability
                                                    • Under-45s like to find their bargains themselves
                                                    • Market Size and Forecast

                                                      • Recession brings explosive growth to a halt
                                                        • Figure 1: Total U.S. ecommerce retail sales, 2003-13
                                                        • Figure 2: Total U.S. ecommerce retail sales, at inflation-adjusted prices, 2003-13
                                                      • Substantial growth still ahead
                                                        • Figure 3: The internet shopping experience, 2002-08
                                                    • Competitive Context

                                                      • Online share growing but may see a plateau
                                                        • Figure 4: E-commerce sales as a percentage of total retail, 2000-08
                                                      • Internet purchases come from respondents who already order by mail or phone
                                                        • Figure 5: Incidence of internetand mail/phone purchase in past 12 months and amount spent, May 2003 -June 2008
                                                      • Online second-hand market grows in recession
                                                        • eBay
                                                          • Craigslist
                                                            • Amazon.com
                                                            • Segment Analysis

                                                              • Fastest-growing categories are not tech-related
                                                                • Figure 6: U.S. retail sales at electronic shopping and mail order houses, by type of merchandise, 2004 and 2006
                                                              • Purchases of apparel draw most new buyers since 2006
                                                                • Figure 7: Categories of internet purchase, January 2002-December 2008
                                                            • Leading Retailers

                                                              • Amazon maintains significant lead
                                                                • Recent initiatives
                                                                  • Office supply chains see increasing share of sales from online
                                                                    • Recent initiatives
                                                                      • Manufacturer direct computer vendors draw visitors but convert fewer
                                                                        • Recent initiatives
                                                                          • Figure 8: Sales and related statistics of top 10 internet retailers, 2008
                                                                      • Brand Qualities

                                                                        • Brand promise of satisfaction can overcome physical presence
                                                                          • Figure 9: Online sales of top 500 sites, by category, 2008
                                                                        • Category leaders share key internet value propositions
                                                                          • Figure 10: Leading retailers by merchandise category, 2008
                                                                        • Netflix: Price, selection, and convenience beat immediacy
                                                                          • Drugstore.com
                                                                            • Blue Nile Jewelry
                                                                              • PayPal an established brand in all of online retail
                                                                                • Competition
                                                                                • Innovation and Innovators

                                                                                  • Widgets make online marketing entertaining and useful
                                                                                    • TrialPay increases visitor conversion with transactional advertising
                                                                                      • Ikan offers time saving and convenience for higher-income shoppers
                                                                                        • Free content on YouTube linked to retail
                                                                                        • Advertising and Promotion

                                                                                          • Television advertising
                                                                                            • TiVo offers in-program advertising options
                                                                                              • eBay
                                                                                                • Figure 11: eBay – awards show win, January 2008
                                                                                              • 1800Flowers.com
                                                                                                • Figure 12: 1-800-Flowers – Jimmy Kimmel Live, February 2009
                                                                                              • Amazon.com
                                                                                                • Figure 13: Amazon – Indie Spotlight, October 2008
                                                                                                • Figure 14: Amazon – Girl in Africa, November 2008
                                                                                              • Internet advertising
                                                                                                • Search engine ads focus on more likely targets
                                                                                                  • Search engine optimization (SEO)
                                                                                                    • Targeting evolves
                                                                                                      • Smart shoppers drawn by online coupons
                                                                                                        • New distribution for coupons
                                                                                                          • Females, whites, and 18-24-year-olds more push-resistant
                                                                                                            • Figure 15: Clicking on internet ads, by gender, age, and race/Hispanic origin, February 2009
                                                                                                          • New ShopAds banners allow direct purchase
                                                                                                          • Market Drivers

                                                                                                            • Recession causes pullback in consumer spending
                                                                                                              • Internet offers several value propositions to shoppers
                                                                                                                • Figure 16: Motivations behind online shopping, February 2009
                                                                                                              • Web facilitates price comparison
                                                                                                                • Shop in-store + compare online
                                                                                                                  • Figure 17: Price comparison online after store visit, by age and HH income, February 2009
                                                                                                                • Wider range of products available
                                                                                                                  • Gifting made easier by wish lists and registries
                                                                                                                    • High gas prices keep consumers at home
                                                                                                                      • Figure 18: Impact of gas prices on online shopping, by gender and household income, February 2009
                                                                                                                    • Online shopping is part of a green lifestyle
                                                                                                                      • Figure 19: Online shopping and the environment, by gender and household income, February 2009
                                                                                                                    • High-speed internet penetration facilitates download purchases
                                                                                                                      • Figure 20: U.S. household penetration of PCs and broadband internet, 2003-07
                                                                                                                    • Free shipping promotions overcome consumer hesitancy
                                                                                                                    • Usage

                                                                                                                      • Online consumer base continues to grow
                                                                                                                        • Figure 21: Incidence of internet purchase and amount spent, January 2002-June 2008
                                                                                                                      • Penetration of online retail skews by gender, age, and household income
                                                                                                                        • Men lag behind women
                                                                                                                          • Online shopping just as probable among Boomers
                                                                                                                            • Higher household income respondents more likely to shop online
                                                                                                                              • Figure 22: Incidence of internet purchase, by various demographic factors, January 2006-December 2008
                                                                                                                            • Online purchases are made on a weekly basis
                                                                                                                              • Figure 23: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
                                                                                                                          • Motivations

                                                                                                                            • Shoppers head to internet to save time and money, buy hard-to-find products
                                                                                                                              • Figure 24: Motivations behind online shopping, February 2009
                                                                                                                            • Women value the internet for selection and availability
                                                                                                                              • Figure 25: Motivations behind online shopping, by gender, February 2009
                                                                                                                            • Over-$100Ks looking to save time and get exactly what they want
                                                                                                                              • Figure 26: Motivations behind online shopping, by household income, February 2009
                                                                                                                          • Reasons Not to Shop Online

                                                                                                                            • Key barriers can be overcome through consumer education
                                                                                                                              • Figure 27: Reasons not to shop online, February 2009
                                                                                                                            • Older respondents still more resistant to cyberspace purchases
                                                                                                                              • Figure 28: Reasons not to shop online, by age, February 2009
                                                                                                                            • Under-$75Ks more opposed to shipping fees
                                                                                                                              • Figure 29: Reasons not to shop online, by household income, February 2009
                                                                                                                          • Limitations on Online Shopping

                                                                                                                            • Majority of online shoppers feel safe enough to try the unfamiliar
                                                                                                                              • Figure 30: Limitations of online shopping, February 2009
                                                                                                                            • Younger respondents 18-24 more suspicious of the unfamiliar
                                                                                                                              • Figure 31: Limitations of online shopping, by age, February 2009
                                                                                                                            • Fear of unfamiliar lower in the more experienced $100k+ group
                                                                                                                              • Figure 32: Limitations of online shopping, by household income, February 2009
                                                                                                                          • Usage of Specific Online Retailers

                                                                                                                            • Amazon receives monthly business from a third of online shoppers
                                                                                                                              • Figure 33: Usage of specific online retailers, February 2009
                                                                                                                            • Younger respondents more likely to purchase at leading retailers
                                                                                                                              • Figure 34: Usage of specific online retailers, by age, February 2009
                                                                                                                          • Attitudes Towards Online Shopping

                                                                                                                            • Internet becomes important source of product reviews and coupons
                                                                                                                              • Figure 35: Attitudes towards online product feedback, promotions and gift shopping, February 2009
                                                                                                                            • Female respondents more likely to trade opinions and look for sales
                                                                                                                              • Figure 36: Attitudes towards online product feedback, promotions and gift shopping, by gender, February 2009
                                                                                                                            • Under-45s more likely to use the web to find exactly what they want
                                                                                                                              • Figure 37: Attitudes towards online product feedback, promotions and gift shopping, by age, February 2009
                                                                                                                            • Higher-earning respondents more active users of online reviews
                                                                                                                              • Figure 38: Attitudes towards online product feedback, promotions and gift shopping, by household income, February 2009
                                                                                                                          • Shopping with Cell Phones

                                                                                                                            • Shopping via phone: Who’s buying now?
                                                                                                                              • One in four shopping via phone or wanting to
                                                                                                                                  • Figure 39: Attitudes towards shopping with cell phones, by gender, February 2009
                                                                                                                                • Under-35s best target for cell phone commerce
                                                                                                                                  • Figure 40: Attitudes towards shopping with cell phones, by age, February 2009
                                                                                                                                • Higher-earning respondents more receptive to cell phone purchases
                                                                                                                                  • Figure 41: Attitudes towards shopping with cell phones, by household income, February 2009
                                                                                                                              • Race and Hispanic Origin

                                                                                                                                • Racial/ethnic bias in online purchasing reflects income disparity
                                                                                                                                  • Figure 42: Incidence of internet purchase and amount spent, by race/Hispanic origin, April 2007-June 2008
                                                                                                                                • Minority respondents share attitudes of younger consumers
                                                                                                                                  • Figure 43: Limitations of online shopping, by race/Hispanic origin, February 2009
                                                                                                                                • Hispanics more likely to stick with well-known branded retailers
                                                                                                                                  • Figure 44: Usage of specific online retailers, by race/Hispanic origin, February 2009
                                                                                                                                • Online Hispanics want to find deals, not be told about them
                                                                                                                                  • Figure 45: Attitudes towards online shopping, by race/Hispanic origin, February 2009
                                                                                                                                • Online English-language Hispanics more likely to shop with their cell phone
                                                                                                                                  • Figure 46: Attitudes towards shopping with cell phones, by race/Hispanic origin, February 2009
                                                                                                                              • Cluster Analysis

                                                                                                                                  • Online minimalists
                                                                                                                                    • Who they are
                                                                                                                                      • Opportunities
                                                                                                                                        • Online fanatics
                                                                                                                                          • Who they are
                                                                                                                                            • Opportunities
                                                                                                                                              • Bargain hunters
                                                                                                                                                • Who they are
                                                                                                                                                  • Opportunities
                                                                                                                                                    • Cluster characteristics
                                                                                                                                                      • Figure 47: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
                                                                                                                                                      • Figure 48: Limitations on online shopping, by clusters, February 2009
                                                                                                                                                      • Figure 49: Online shopping preferences, by clusters, February 2009
                                                                                                                                                      • Figure 50: Use of feedback and couponing, by clusters, February 2009
                                                                                                                                                      • Figure 51: Interest in gift cards and wish lists, by clusters, February 2009
                                                                                                                                                      • Figure 52: Usage of specific online retailers in the past month, by clusters, February 2009
                                                                                                                                                      • Figure 53: Motivations for shopping online, by clusters, February 2009
                                                                                                                                                    • Cluster demographics
                                                                                                                                                      • Figure 54: Online shopper clusters, by gender, February 2009
                                                                                                                                                      • Figure 55: Online shopper clusters, by age, February 2009
                                                                                                                                                      • Figure 56: Online shopper clusters, by household income, February 2009
                                                                                                                                                      • Figure 57: Online shopper clusters, by race/Hispanic origin, February 2009
                                                                                                                                                      • Figure 58: Online shopper clusters, by marital status and presence of children, February 2009
                                                                                                                                                    • Cluster methodology
                                                                                                                                                    • Custom Consumer Groups

                                                                                                                                                      • Marital status and children in the household
                                                                                                                                                          • Figure 59: Incidence of internet purchase and amount spent, by marital status and children in the household, October 2007-December 2008
                                                                                                                                                          • Figure 60: Attitudes towards online shopping, by marital status and presence of children, February 2009
                                                                                                                                                          • Figure 61: Online shopping and gas prices, by marital status and children in the household, February 2009
                                                                                                                                                        • Gender and presence of children
                                                                                                                                                            • Figure 62: Incidence of internet purchase, by gender and children in the household, February 2009
                                                                                                                                                        • Appendix: Other Useful Consumer Tables

                                                                                                                                                          • Motivations
                                                                                                                                                            • Figure 63: Motivations behind online shopping, by age, February 2009
                                                                                                                                                          • Reasons not to buy online
                                                                                                                                                            • Figure 64: Reasons not to shop online, by gender, February 2009
                                                                                                                                                          • Limitations
                                                                                                                                                            • Figure 65: Limitations of online shopping, by gender, February 2009
                                                                                                                                                          • Popularity of online retailers
                                                                                                                                                            • Figure 66: Usage of specific online retailers, by household income, February 2009
                                                                                                                                                        • Appendix: Incidence of Leaving Feedback Rising

                                                                                                                                                          • Five-point difference from November 2008
                                                                                                                                                            • Online feedback surveyed in November 2008
                                                                                                                                                              • Figure 67: Leaving online feedback, by gender, November 2008
                                                                                                                                                              • Figure 68: Leaving online feedback, by age, November 2008
                                                                                                                                                              • Figure 69: Leaving online feedback, by household income, November 2008
                                                                                                                                                              • Figure 70: Leaving online feedback, by race/Hispanic origin, November 2008
                                                                                                                                                          • Appendix: Trade Associations

                                                                                                                                                            Companies Covered

                                                                                                                                                            • Adidas (USA)
                                                                                                                                                            • Amazon North America
                                                                                                                                                            • Amway Corporation
                                                                                                                                                            • Apple, Inc
                                                                                                                                                            • Banana Republic
                                                                                                                                                            • Best Buy stores (USA)
                                                                                                                                                            • Blockbuster USA
                                                                                                                                                            • Bureau of Economic Analysis
                                                                                                                                                            • Cabela's Inc
                                                                                                                                                            • CDW Corporation
                                                                                                                                                            • Clinique Laboratories, Inc.
                                                                                                                                                            • Craigslist
                                                                                                                                                            • CVS Caremark Corporation
                                                                                                                                                            • Dell Inc.
                                                                                                                                                            • drugstore.com
                                                                                                                                                            • Facebook, Inc.
                                                                                                                                                            • FedEx Corporation
                                                                                                                                                            • Foot Locker U.S.
                                                                                                                                                            • GameStop Corp
                                                                                                                                                            • Gap (USA)
                                                                                                                                                            • Google, Inc.
                                                                                                                                                            • Greenfield Online
                                                                                                                                                            • Hardee's Food Systems, Inc.
                                                                                                                                                            • Hewlett-Packard Company
                                                                                                                                                            • Hitwise Pty. Ltd.
                                                                                                                                                            • Home Depot (USA)
                                                                                                                                                            • Intuit Inc.
                                                                                                                                                            • J. Crew (Internet)
                                                                                                                                                            • JCPenney (department stores and catalog)
                                                                                                                                                            • Lagardere Services
                                                                                                                                                            • Lowe Worldwide
                                                                                                                                                            • Macy's, Inc.
                                                                                                                                                            • McAfee, Inc.
                                                                                                                                                            • Microsoft USA
                                                                                                                                                            • MySpace.com
                                                                                                                                                            • National Retail Federation (NRF)
                                                                                                                                                            • Netflix, Inc.
                                                                                                                                                            • Nike
                                                                                                                                                            • NutriSystem, Inc.
                                                                                                                                                            • Office Depot (North America Retail)
                                                                                                                                                            • OfficeMax, Inc
                                                                                                                                                            • Overstock.com Inc.
                                                                                                                                                            • Payless ShoeSource Inc
                                                                                                                                                            • PayPal Inc.
                                                                                                                                                            • PriceGrabber.com, LLC
                                                                                                                                                            • Random House, Inc.
                                                                                                                                                            • Rite Aid Corporation
                                                                                                                                                            • SAM's Club
                                                                                                                                                            • Sears Holdings Corporation
                                                                                                                                                            • Shopzilla Inc.
                                                                                                                                                            • Staples, Inc
                                                                                                                                                            • Target Corporation
                                                                                                                                                            • The New York Times Company
                                                                                                                                                            • Tiffany & Co.
                                                                                                                                                            • Timberland (USA)
                                                                                                                                                            • TiVo Inc
                                                                                                                                                            • Toys R Us
                                                                                                                                                            • U.S. Bureau of Labor Statistics
                                                                                                                                                            • U.S. Bureau of the Census
                                                                                                                                                            • US Department of Commerce
                                                                                                                                                            • Victoria's Secret
                                                                                                                                                            • Virgin Group Ltd.
                                                                                                                                                            • Walgreen Co
                                                                                                                                                            • Walmart Stores (USA)
                                                                                                                                                            • Warner Bros. Entertainment Inc.
                                                                                                                                                            • Williams-Sonoma, Inc
                                                                                                                                                            • Yahoo! Inc
                                                                                                                                                            • YouTube, Inc.
                                                                                                                                                            • Zappos.com Inc.

                                                                                                                                                            Online Shopping - US - May 2009

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