Dive Brief:
- The Commerce Department says that retailer e-commerce revenues jumped 15.1% in the third quarter from the comparable quarter a year ago to reach $87.5 billion.
- Online sales are expected to grow twice as fast as the overall year-to-year growth forecast for the holidays, 3.7% to reach $105 billion.
- Home Depot, Macy’s, Nordstrom, Target, Wal-Mart and other big retailers have opened new warehouses to speed online order fulfillment in the past year.
Dive Insight:
Retailers are building up their online order fulfillment capabilities just in time for what looks to be the busiest e-commerce season in history. Many retailers are reporting that online sales are growing at a double-digit pace, and are opening new fulfillment centers and warehouses to meet the demand.
Home Depot—which reported this week that online sales grew 25% in the third quarter to reach 5.1% of its $21.8 billion take—recently opened a third online fulfillment center in Ohio, and now can deliver orders to 90% of customers in an Amazon-like two days. Wal-Mart, too, recently added 1 million square feet of dedicated fulfillment space to handle online orders in Atlanta, and says mobile orders have multiplied tenfold in three years.
Amazon Prime’s two-day delivery window is the new normal for companies with any substantial e-commerce presence. Macy’s, Target, and Nordstrom have each cited the timeline in opening new online-only fulfillment facilities in the past year; Macy’s opened its Tulsa warehouse in order to get 90 percent of packages to customers in the Western states in two days.
Most analysts are forecasting a good holiday season, and online sales represent the area of fastest growth. National Retail Federation (NRF) forecasts digital sales will jump 6% to 8% to reach more than $100 billion during the holidays, while expecting overall growth of 3.7%. The Commerce Department says that online sales made up 7.4% of overall retail spending in the U.S. in the third quarter, or $87.5 billion.
