1-in-5 Electronics and Appliance Sales Are Now Made Online

The popular perception is that all sales are moving online. But the reality is far more nuanced. People enjoy shopping as a form of entertainment and a social exercise. Those elements are missing when sitting in front of a computer or pecking away on a phone. There are startups attempting to create a social shopping environment, but coordination and selection remain challenges, especially when it comes to fashion.

There is, however, one aspect of shopping in which the web excels: when the customer has done his or her research, knows what they want - and wants it fast, ecommerce has a decided advantage. And the data suggest that competitive edge is growing, especially in the realm of electronics and appliances.

These purchases tend to be based on attributes, costs and the recommendations of others. There is less of the emotional buy-in needed by the consumer alone or with the direct endorsement of others. Finding the device, making sure the features desired are available and that the price is consistent with expectations is exactly the sort of sales experience the web is terrific at providing. Given the factors involved in making this kind of sale, that ecommerce is dominating in this arena and is expected to continue to do so is probably to be expected.

But given the coevolutionary nature of competition, it may well be that the next move by bricks-and-mortar retailers is to offer a hybrid model in which the digital and physical experience are combined in ways that optimize the advantages of both. The Apple Genius Bar, for instance, has proven to be a significant differentiator for that company as it reduces customers' fears as they pay a premium for the product. It may well be that as familiarity with more expensive and complicated devices increases, the need for in-person hand-holding in the electronics field will decrease. The trend suggests, however, that such concerns are already diminishing. JL

Phil Izzo reports in Real Time Economics:

Wal-Mart blamed its disappointing earnings in part on electronics makers’ failure to introduce new technology for consumers. But maybe more Americans are getting their toys and gadgets on the Web.
21%: The share of electronics and appliance retail sales made online.

This year hasn’t been particularly kind to retailers who sell electronics and appliances. Commerce Department data show their sales are down about 0.5% since the end of 2012 through the end of the second quarter. General merchandise stores, such as Wal-Mart that sell electronics among other things, haven’t fared much better with their sales up just 0.5% over the same period. But the first half of 2013 has been much better for e-commerce. Sales of goods and services online are up 8.8% from the end of last year, according to the Commerce Department. Internet sales accounted for 5.8% of total retail sales in the second quarter. That’s up from 3.5% just five years ago, and has been moving consistently higher with only a slight slowing during the recession.
Of course, sales of electronics and appliances aren’t the biggest share of online purchases. Clothing and automotive parts continue to make up a greater percentage of total sales, but technology purchases are growing.
In 2011, the most recent year for which data are available, 18% of sales of electronics and appliances were arranged over the Web. If the 10-year trend continues, more than 1-in-5 electronics purchases this year will be online and it would rise as high as 1-in-3 within another 10 years.
As more consumers grow accustomed to purchasing products on the Internet and companies like Amazon make delivery faster and cheaper, brick-and-mortar retailers will have a lot more to worry about than how long it’s taking Apple to think up a new gadget