Online Commerce: a Trillion-Dollar Bonanza

By: Amy Pollick

Shopping online is big business — to the tune of $1.3 trillion in 2022.

According to Commerce 360, the United States Department of Commerce reported in February that online shopping in the United States topped the $1 trillion mark for the first time, with a growth rate of 10.6% since 2021. In fact, Fit Small Business reports about 80% of the U.S. population shops online.

Photo byrupixen.comonUnsplash

What Are We Buying?

With all the money being spent online, what are Americans buying? According to Fit Small Business, the top-selling categories are fashion, media, and electronics. Do Dropshipping, a shipping website, reports that apparel purchases edge out electronics for the top spot. According to the site, the apparel and accessories market accounts for 29.5% of all U.S. online sales.

Robyn, owner of A Dime Saved, buys clothing online. "I basically buy everything online except for produce. Even clothes and shoes. I'd rather order a few sizes and try them on at home and then return than going into the store. Amazon has a "try before you buy" program where you can buy things and return them before they charge you."

One trend driving the online apparel market is fast fashion. A major player since the mid-2000s, fast fashion focuses on inexpensive, rapidly produced, trendy clothing. H&M and Topshop are two of the most visible brick-and-mortar fast fashion retailers. In the online world, Shein and Temu are popular stores, although Temu sells a variety of items, including apparel and home goods.

While fast fashion is extremely popular, there are concerns about whether it is ethical and if it is environmentally responsible. Audrey Stanton, writing for the lifestyle website The Good Trade, says, "Fast fashion garment production leverages trend replication and low-quality materials (like synthetic fabrics) in order to bring inexpensive styles to the end consumer." Stanton also says quality is sacrificed during manufacturing to keep production numbers up. This results in fabric waste going to the landfill, along with the toxic materials and dyes the makers sometimes use.

With the online fashion market come online clothing apps. Most retailers have apps, which are popular ways to purchase clothing and accessories. Shein hit the ground running with their clothing app, which has 100 million downloads from the Google Play store and over 1 million ratings on the Apple App Store.

Why Buy Online?

Convenience is one of the primary reasons people shop online to start with. Robyn says, "I love shopping online. I try to shop online as much as possible. I think it helps me save money because there is less chance of impulse buying and it's easier to use coupons or get cash back. Also, as a mom, I love being able to shop late at night or while I am doing other things -- this way I don't need to take my kids to the store!"

Tayo Oredola from Low Carb Africa agrees. "I have been shopping online for many years and it's my primary mode of shopping for a few reasons. I love that I can see the selection and different options of what I want to buy instead of walking around a store for hours. I can decide exactly how much I want to spend and not go over my budget because I got tempted to buy something that looked flashy. And as an added bonus, I don't have to wait in line for returns. The UPS store is less than two minutes from my house."

The availability of direct-to-home delivery is the primary reason people shop online, according to Fit Small Business. Some 56% of those surveyed said they liked the "hassle-free shopping experience."

Ashley Pichea, travel blogger with Rooted Wanderings, is on board with that concept. "While I love to 'buy local' as much as possible, there's a limit to what's available near me as I live an hour from the nearest shopping district. I love the convenience of buying online, often taking advantage of online-only sales and rebates… and having my purchases delivered to my door just a few days later."

John Dealbreuin, from Financial Freedom Countdown, has a different take on the convenience angle. He says, "It's easier to find the colors and styles I need online. And I can also read reviews before buying. The receipts are electronically accessible for tax or return purposes, which makes it easy when filing taxes for my rental properties. With most stores providing free delivery and favorable return policies, it is convenient to not drive around when shopping."

The Future of Online Shopping

Obviously, online shopping isn't going anywhere. In fact, it's projected to keep growing. Besides apps and websites, social media platforms are rising in popularity for online commerce. Fit Small Business estimates social commerce sales will total $79.64 billion by 2025.

Artificial Intelligence (AI) has its digital fingers in nearly every facet of the online world, and online shopping is no exception. According to Rockt, an e-commerce technology company, and Harris Poll, 88% of Gen-Zers think AI can improve online shopping. These shoppers, who are looking for deals, low prices, and a personalized experience, believe AI can help.

"Brands and retailers across categories are scrambling to identify how they can best use AI to elevate their e-commerce customer experience and drive revenue," says Elizabeth Buchanan, Chief Commercial Officer at Rokt.

According to the poll, Gen-Zers feel AI can help them compare prices and find better deals on products. They also want to see offers and suggestions related to what they're shopping for, as well as personalized assistance and help finding product reviews. A lack of a personalized experience, in fact, will make 20% to 29% of shoppers leave their carts online.

With 80% of Americans shopping on the Internet, the whole online experience is something retailers just cannot afford to ignore.