2018 U.S. Online Retail Forecast | FTI Consulting

2018 U.S. Online Retail Forecast

Retail & Consumer Products | Corporate Finance & Restructuring

September 10, 2018

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Online Shopping and Large Retailers: BFFs or Frenemies?

As we reflect on yet another stellar year for U.S. online retail sales, we again must ponder whether the dream of digital riches for large retail chains has finally begun to materialize after more than a decade of high expectations and general disappointment despite great efforts.

Back in the early 2000s, some prescient Internet analysts saw where online consumer shopping eventually would go. They saw the strong likelihood of double-digit online sales growth annually for many years ahead — coming mostly at the expense of stores. They envisioned online shopping moving from desktop computers to mobile devices, even if the technology wasn’t yet there. Such foresight recognized how enthusiastically consumers were embracing online shopping, and how quickly the technology underlying digital commerce was changing.

Following the tech stock crash of 2000-2002, it was widely assumed that the big winners of online migration by shoppers would be large chain stores that adapted an omni-channel strategy and, of course, the first-mover online retail king, Amazon. The tech stock crash put an end to the notion that upstart pureplays were going to vanquish entrenched retail chains in the battle for online consumer spending. The infamous tech stock crash claimed 300 casualties that were Internet pure-plays and wiped out $820 billion of shareholder wealth in the process, according to a 2002 report from then-Morgan Stanley Internet guru Mary Meeker. Famous flameouts, such as Webvan and Pets.com, were reminders that being an early mover back then wasn’t necessarily an enduring advantage, while second movers could learn from those fatal mistakes and then do it better.

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