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Is the E-Commerce Bubble About to Burst?

While e-commerce sales rose 12.2% year-over-year in May, recent research from Boston Consulting Group (BCG) posits that Americans’ move to online shopping has plateaued.

The Chicago-based consultancy surveyed more than 3,300 U.S. consumers this month and discovered that while more than three-quarters said they bought something from Amazon in the last year, as many as 92 percent don’t plan to increase their online spending over the next three years.

Further, more than a quarter of those respondents that already shop online said they will spend less in that channel in the future.

Put another way, more than twice as many people say they’ll spend less online over the next three years than those who say they’ll spend more online. And it’s a sentiment shared among Millennials, Gen X-ers and Baby Boomers alike.

“Consumers are notoriously unable to predict their spending patterns,” said Michael Silverstein, a BCG senior partner and expert on consumer behavior and retail and packaged-goods innovation. “However, the findings from this research certainly pour cold water on everyone’s expectations for a continuously rising e-commerce world. E-commerce winners will have to earn new dollars and new spending by providing new value. That means me-too players will suffer—and leaders will need to provide more user-friendly websites, lower prices and offers tailored to individuals customers.”

He added, “E-commerce is a channel, like any form of distribution: growth does not continue at a rapid, double-digit rate forever. Most consumer categories have been available online for several years. The ‘newness’ is gone, and we’re looking at mature levels of penetration in many categories.”

E-commerce growth will be harder

A corresponding Nielsen survey said something similar. According to the research firm’s “Retail Channel Track 2016,” American shoppers are most likely to make a purchase at a physical store (82 percent) than online using a computer or laptop (41 percent) or using a mobile device or tablet (12 percent).

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However, Nielsen also said that while brick-and-mortar wears the pants when it comes to sales, retailers and brands shouldn’t ignore online and mobile because modern shoppers expect a connected, seamless experience all around.

In fact, of the shoppers surveyed, among the 52 percent who “shopped around” before purchasing in the past six months, roughly 60 percent did so online and 7 percent on mobile.

In the case of apparel, almost half of U.S. shoppers (41 percent) bought clothes online in the last six months and roughly 12 percent made a mobile apparel purchase, with physical store locations serving as showrooms for shoppers who ultimately bought something on their mobile device or online.

With that being said, BCG’s survey said airline tickets, hotel reservations and entertainment tickets and reservations are the only three categories that respondents said they would spend more on over the next three years.

Christine Barton, the BCG senior partner who led the research, commented, “We’ve done this survey periodically and this is the first time we’ve seen such low future intention to increase online spending across categories. The plateau doesn’t mean that it’s ‘game over’ for online and omnichannel retailers. But it does suggest that e-commerce growth will now be harder for most of them.”