desert tortoise

Will slow but steady win the race for e-commerce? 

According to two separate releases this week, e-commerce sales continue to grow, especially when stacked up against growth of overall sales. The Commerce Department released its retail e-commerce sales figures for the second quarter yesterday. The release coincided with a new poll conducted by Harris Interactive and published today by Jumio which showed that online retailers are making headway against a key challenge — abandoned shopping carts in the mobile channel. 

The question is, is this improvement moving fast enough to keep up with the overall growth in the industry? 

E-Commerce Sales by the Numbers 

The Commerce Department reported that US retail e-commerce sales (pdf) for the second quarter of 2015 totaled $83.9 billion, an increase of 4.2 percent over the first quarter. The government adjusts these numbers for seasonal variation, but not price changes.

Total retail sales for the second quarter were estimated to be $1.1 trillion, a quarter over quarter increase of 1.6 percent. 

Year over year, second quarter e-commerce sales rose by 14.1 percent and total retail sales during the same period rose by 1 percent. 

E-commerce sales in the second quarter of 2014 accounted for 7.2 percent of total sales. 

This is not to say that e-commerce is rapidly gobbling up sales that would otherwise go to brick-and-mortar retailers. But the numbers do show a steady — albeit slow — increase in share of sales. According to the Commerce Department's adjusted figures of e-commerce sales as a percentage of total sales: 

  • In the second quarter of 2014, e-commerce represented 6.3 percent of total sales 
  • In the third quarter of 2014, it was 6.5 percent
  • In fourth quarter of 2014, 6.6 percent
  • And in the first quarter of 2015 they were 7 percent of total sales. 

$24.5 Billion Left Behind 

The poll released by Jumio shares some equally revealing figures. Even as more consumers move online for purchases — especially the mobile channel, the study's focus — e-commerce retailers could be realizing even more revenue, based on merchandise abandoned by shoppers. 

The results, which were part of Jumio's Mobile Consumer Insights study, found that more than one-half of US smartphone owners (or 56 percent) have abandoned a mobile transaction. This is down from the 2013 survey, which found that 66 percent of respondents failed to complete a transaction due to issues during checkout. 

After purchase uncertainty, usability issues rounded out the top three reasons why users abandon a purchase or account registration, including slow load times (36 percent) and difficulty navigating the checkout process (31 percent).

Altogether, the study estimates that retailers leave some $24.5 billion in revenue on the table due to poor mobile user experience. To put that number in context, Statista estimated that mobile commerce revenues reached about $57 billion in 2014. And for any retailer who is ignoring mobile commerce, it should act as a wake up call. "In 2018, 27 percent of all retail e-commerce is expected to be generated via mobile commerce," the report states. 

Retailers need to remember that the purchase point is a customer touchpoint that is a make or break moment,  Marc Barach, Chief Marketing Officer of Jumio told CMSWire. 

"They need to be passionate about it, it can't just be another tech project," he said. 

That said, abandoned shopping cart percentage is dropping, he noted, pointing to the 10 percent decrease from last year to this in shoppers who ditched mobile purchases during the process. 

The frustrating part is that retailers probably have more control over the abandoned shopping cart process than they realize, he said. "Everyone watches their completion numbers, so it is not as if they don't know about the lost revenues. But they don’t realize how much leverage they really have to improve the process."