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Online Shopping - US - June 2015

With a 16% CAGR (compound annual growth rate) from 2010-14, e-commerce is the engine of growth for retail, driving gains in excess of $500 million for 11 retailers in 2014 alone. At the same time, many e-tailers are having trouble profiting even on these high levels of topline growth, with Amazon, Etsy, Zulily, ThinkGeek, and CafePress reporting profit losses for 2014 or in the first quarter of 2015.

This report looks at the following issues:

  • Buyers focused on price
  • Wants beating needs
  • Amazon’s grip tight
  • Good times, lousy profits

While high levels of expenses among e-tailers are tied to consumer acquisition costs and product fulfillment, the disparity between income and profits suggests that sales are being buoyed by untenable pricing – a strategy driven by the 28% of online shoppers who always choose the lowest price retailer.

E-tailers (including both web-only and those with brick-and-mortar stores) need to be competitive on price points in order to draw sales, but sticking to bottom-of-the-barrel pricing as a retailer’s sole point of differentiation will eventually lead to insolvency. This report aims to help retailers find the solution to this quandary through quantitative and qualitative analysis of the market.

The report is inclusive of all online purchasing, whether the purchase is made on a PC, tablet, smartphone, or other device, with distinctions in purchasing habits via mobile devices covered in Mintel’s upcoming Mobile Advertising and Shopping – US, July 2015.

The focus of this report is on tangible objects that require pick-up or delivery: digital media, travel, entertainment tickets, insurance policies, and other intangible products are not the main subject of this report. Prescription drug sales are included in market size figures but are otherwise excluded.


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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Buyers focused on price
            • Figure 1: Price vs. assistance and rapid checkout, March 2015
          • Wants beating needs
            • Figure 2: Categories purchased online, March 2015
          • Amazon’s grip tight
            • Figure 3: Extent of online shopping conducted on Amazon, March 2015
          • Good times, lousy profits
            • Figure 4: US total online shopping sales, at current prices, 2010-20
          • The opportunities
            • The more the merrier
              • Figure 5: Mean spend on most recent order, by number of children in household, March 2015
            • Low free-shipping threshold; omnichannel options for returns
              • Figure 6: Opportunities related to shipping and returns, March 2015
            • What it means
            • The Market – What You Need to Know

              • CAGR of 16% from 2010-15
                • Trillions available for growth
                  • Rise of web, mobile, price-checking to drive future growth
                  • Market Size and Forecast

                    • 16% behind, 12% ahead
                        • Figure 7: Total US online retail sales, at current prices, 2010-20
                        • Figure 8: US total online shopping sales, at current prices, 2010-20
                    • Market Perspective

                      • E-commerce carries limited share of total retail
                          • Figure 9: Attitudes that limit online shopping, March 2015
                        • Omni-channel opportunity for clothing
                          • Sense of touch, same-day premiums, and existing brick-and-mortar trips
                              • Figure 10: Product categories purchased online, March 2015
                            • Limited interest in in-store pickup
                                • Figure 11: Attitudes to in-store pick-up of online purchases, March 2015
                            • Market Factors

                              • Mobile advances
                                • Figure 12: US mobile shopping sales as share of total online shopping, 2011-17
                              • Showrooming and second-screening
                                • Figure 13: Attitudes related to showrooming and second-screening, April 2012-December 2014
                              • Living online
                                • Figure 14: Role of internet in leisure and socialization, April 2010-December 2014
                              • Just a couple clicks from checking it out to checking out
                                • Figure 15: Role of internet as source of information, April 2010-December 2014
                              • One in four see online as default shopping choice
                                • Figure 16: Online channel as default for shopping, April 2012-December 2014
                                • Figure 17: Online channel as default for shopping, selected demographics, April-December 2014
                            • Key Players – What You Need to Know

                              • Amazon reigns
                                • Rising tide swells most ships
                                  • Topline and bottom line in conflict
                                    • Unique product, social mandates carry newcomers
                                    • What’s Working?

                                      • Amazon carries one quarter of sales
                                        • Figure 18: Extent of online shopping conducted on Amazon, March 2015
                                      • In their own words
                                        • Eleven brands see half billion dollar increase
                                          • Figure 19: Selected stores with online sales growth of $500 million or more, 2014
                                      • What’s Struggling?

                                        • Physical media, specialty buyer groups, hobbyist products
                                          • Figure 20: Selected online stores with sales declines, 2014
                                        • The bottom line: struggling to earn a profit
                                            • Figure 21: Focus on price and interest in assistance and rapid checkout, March 2015
                                        • What’s Next?

                                          • Unique inventory
                                            • Luxury, value, health, social consciousness
                                                • Figure 22: Selected online stores with sales growth exceeding 75%, 2014
                                            • The Consumer – What You Need to Know

                                              • Household with multiple children most frequent shoppers
                                                • Spending and frequency intertwined
                                                  • Physical media, women’s clothing rank high
                                                  • Frequency of Online Shopping

                                                    • Majority shop online at least monthly
                                                      • Figure 23: Frequency of online shopping, March 2015
                                                    • Parents, 18-34s lead
                                                      • Figure 24: Frequent online shopping, selected demographics, March 2015
                                                  • Spend Per Order

                                                    • Order size at $114 tied to shipping, research
                                                      • Frequent buyers also liberal spenders
                                                          • Figure 25: Mean spend on most recent order, selected demographics, March 2015
                                                      • Products Purchased and Stores Used

                                                        • Books, apparel, accessories top purchases
                                                          • Figure 26: Types of products purchased online in past three months, April 2013-December 2014
                                                        • Wide divide between Amazon and competitors
                                                          • Figure 27: Online stores used in past three months, April 2013-December 2014
                                                      • Expedited Shipping and Automated Reordering

                                                        • Niche services taken up by households with kids
                                                          • Figure 28: Use of expedited shipping and automatic reordering, by selected demographics, March 2015
                                                      • Posting Reviews

                                                        • Posting product reviews common across demographic groups
                                                          • Figure 29: Posting product reviews, by selected demographics, March 2015
                                                      • Saving Payment Information

                                                        • One in four opposed to saving payment information
                                                          • Figure 30: Opposition to collecting payment information, by selected demographics and behaviors, March 2015
                                                      • Appendix – Data Sources and Abbreviations

                                                        • Data sources
                                                          • Sales data
                                                            • Market size definition
                                                              • Key players
                                                                • Fan chart forecast
                                                                  • Consumer survey data
                                                                    • Consumer qualitative research
                                                                      • Abbreviations and terms
                                                                        • Abbreviations
                                                                          • Terms
                                                                          • Appendix – Market

                                                                              • Figure 31: Total US online sales, at inflation adjusted prices, 2010-20

                                                                          Online Shopping - US - June 2015

                                                                          US $4,395.00 (Excl.Tax)