III. Industry Analysis
Industry Statistics & Trends
The following industry size facts and statistics bode well for [Company Name].
The E-Commerce industry will attract a larger customer market as more households purchase items online. Over the past five years, revenue is expected to increase at an annualized 13.4% to $526.6 billion. However, the looming threat of regulation may hamper sales, and heightened competition is projected to slow profit growth in the coming years.
Trends and drivers include:
- Per capita disposable income is projected to accelerate an average 2.4% per year on average during the period, and employment is on the rise. When income increases and consumers are more willing to spend money, industry operators will experience a revenue boost.
- Moreover, heightened employment will limit leisure time and encourage consumers to leverage the convenience of online shopping.
- In addition, the industry will benefit from additional changes in consumer preferences during the next five years.
- Rather than spending more on goods in department stores or other retail outlets, consumers will increasingly turn to price-competitive options offered online. As a result of this shift in customers’ shopping tendencies, the industry is expected to continue to experience solid growth.
- Internet traffic volume will continue to steadily grow during the next five years, further contributing to industry growth. Internet traffic volume is anticipated to grow as consumers gain easier and more convenient access to the internet with improved technology and the rise of smartphones and public Wi-Fi access. More consumers will have access to online retailers and therefore, will shop at online industry establishments.
- Online retailers will also continue to benefit from low operational costs because they do not have to rent, staff or operate brick-and-mortar stores. Improvements in productivity and efficiency will aid profit growth; however, price-based competition and the continued flood of new entrants is expected to limit industry returns.
- Competition within the industry will be based on the reputation and reliability of operators and prices.
- Operators will attempt to expand the number of regions they service to capture a wider range of customers. Therefore, shipping and handling costs will also be a point of differentiation among players, as will the ability to provide timely product delivery and refunds.
- The functionality of shopping websites and the ease by which consumers can place orders will contribute to the number of repeat and loyal customers as well.
- To increase their customer base, online retailers will continue to improve the online sales process. These efforts will include more accurate product descriptions, more competitive prices and lower freight and delivery costs.
- Furthermore, operators will gradually place a greater emphasis on customer service, increasing their efforts to meet the various needs of online shoppers. Operators will strive to deliver superior after-sales service and devise ways of assuaging consumer concerns regarding privacy and credit card payment issues.
- Online retailers that meet these requirements will ultimately benefit from strengthened brand recognition and higher consumer spending.