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Submitted by Andy_B on Wednesday, 10 March 2021 Page Views: 471

Even with limited capital, it's easy to start a business these days thanks to the growth of e-commerce. As consumers increasingly rely on online shopping - an estimated 95% of purchases will be made online by 2040 - e-commerce is opening the doors of opportunity for countless entrepreneurs. And, these e-commerce sales opportunities are growing fast. In 2017, e-commerce was responsible for $2.3 trillion in sales, which is expected to nearly double to $4.5 trillion by 2021. In the U.S. alone, online shopping already accounts for 10% of retail sales and is expected to grow at a 15% year-over-year rate.
Graph: Global e-commerce sales (Source: Shopify)

Knowing key e-commerce statistics and facts, from demographics and shopping behaviour to shopping cart abandonment and trends, will give you a deeper understanding of what's going on in e-commerce now - and where it's headed.

Digging into e-commerce demographics.

Millennials and Gen Xers are the biggest online shoppers, with 67% of Millennials and 56% of Gen Xers preferring to shop online versus a brick-and-mortar store. Part of the reason you see these two segments of the population spending more money online is because they spend more time shopping online. Millennials and Gen Xers spend 50% more time shopping online than their older counterparts: 6 hours versus 4 hours.

Although women are stereotypically held down as shoppers, men dominate the statistics when it comes to online shopping, spending 28% more than women when shopping online.

Breakdown of e-commerce shopping behaviour.

The statistics on e-commerce shopping behaviour are incredibly revealing: 43% of online shoppers reported shopping in bed, 23% in the office, and 20% from the bathroom or car.

It turns out that alcohol increases sales for e-commerce businesses, with 10% of customers reporting that they shopped while drunk. In the end, men were more than twice as likely to shop in such conditions, with 14% saying they had done so, while only 6% of women said they had.

Given the role alcohol plays in online purchases, it should come as no surprise to find out that 42% of online shoppers have made a purchase they regretted, and 21% have accidentally bought something they didn't want.

Although 48% of online shoppers have overspent or bought something unplanned while shopping online, the purchase path is not straightforward: 85% of customers start a purchase on one device and finish it on another.

E-commerce Market Share: US vs. Global Trends

Although the United States is often considered the largest market for e-commerce, it is not. It does, however, make the list of the top 10 largest e-commerce markets in the world:

China: $672 billion
United States: $340 billion
United Kingdom: $99 billion
Japan: $79 billion
Germany: $73 billion
France: $43 billion
South Korea: $37 billion
Canada: $30 billion
Russia: $20 billion
Brazil: $19 billion

Nielsen's Global Connected Commerce report provides a detailed breakdown of the most lucrative industries by country, with South Korea having the largest share of fashion (77%) and beauty products (66%), as well as non-food household goods (52%), packaged food (51%) and fresh food (37%).

However, Japan tops the charts for books, stationery and music purchases with 79%. Spain tops the charts for travel with 67%, and Brazil takes the highest spot on the podium with consumer electronics at 57%.

As more global markets are developed, the U.S. share of e-commerce market sales is steadily declining. From a global share of 20.2% in 2015, the U.S. is expected to drop to 16.9% by 2020. On the other hand, global B2B e-commerce sales are increasing in Eastern European markets.

US share of e-commerce market revenue (Image source: Statista)

The e-commerce marketplace also strengthens globalization: 57% of online shoppers have purchased from a foreign retailer. The payment method preferred by these shoppers varies around the world. Globally, credit cards are the preferred payment method, used in 53% of transactions, followed by digital payment systems (43%) and debit cards (38%). However, digital payment systems are the preferred method in China and Western Europe, while cash on delivery is the preferred method for Eastern Europe, Africa and the Middle East.

Online shoppers' payment methods (image source: Shopify)

Payment method aside, more Americans already prefer shopping online than in a physical store, with 51% of Americans making the trip to shop. Overall, 96% of Americans have made at least one online purchase in their lifetime, 80% in the last month alone. However, Americans spend 64% of their budget in physical stores and only 36% online.

With 44% of total e-commerce sales in the U.S. in 2017 and a 23% year-over-year growth rate in the U.S., it's shocking that 46% of American businesses still don't have a website.

Business-to-consumer e-commerce

B2C e-commerce refers to a transaction between a business and a consumer that is conducted online. It can also refer to paid online services or content that directly serves consumers. Amazon is a good example of the breadth of B2C options, as it started as an online retailer but eventually branched out into services such as cloud storage and paid content such as apps and media.

China represents the largest B2C e-commerce market. However, if you think the B2C e-commerce market is big, prepare to be impressed by the volume of transactions through the business-to-business e-commerce market.

Business-to-business e-commerce

B2B e-commerce refers to the marketing, selling and distribution of products from one company to another online. This includes software as a service (SaaS) companies, web hosting, wholesalers and so on. It also includes buying and selling businesses.

With nearly half of U.S. B2B companies offering their entire product line online, it's no surprise that B2B is expected to generate $7.6 trillion in 2017, dwarfing the B2C market of an estimated $2.4 trillion.

B2B E-Commerce (Image Source: Shopify)

The study, conducted by Frost and Sullivan, predicts that B2B e-commerce sales will reach $12 trillion globally by 2020, with China and the U.S. leading the global market. A year earlier, by 2019, B2B companies are estimated to spend more on e-commerce technology than online retailers.

Although the growth of B2B e-commerce is attractive, the business model faces myriad challenges. Prices are often volatile and sales volumes are high, so B2B companies need flexible transportation and logistics solutions. In addition, there are issues with taxes as well as regulatory concerns, especially when dealing with companies overseas. Another challenge for B2B, especially in software, is determining how to integrate the product with other existing systems.

Conversion Rate

Conversion rate, the percentage of visitors to your website who reach the desired goal, is one of the most important metrics to track in online commerce. A high conversion rate shows that you're able to get more value from the customers you already have. This means lower customer acquisition costs. It also means that if you put in more effort, it can lead to more customers and higher revenue.

Average e-commerce conversion rates are between 3% and 4%, with 43% of e-commerce traffic coming from organic Google searches. This means that it's still essential to build your e-commerce site with SEO in mind.

Average conversion rates (Image source: Wolfgang Digital)

Several factors play a big role in increasing the conversion rate of your business. First and foremost is a good user experience. This boils down to good graphics, fast loading times, and easy payment; PayPal transactions have 70% higher checkout rates than non-Paypal transactions.

PayPal Checkout Prices (Image Source: PayPal)

High-quality customer service, as well as strong reviews, recommendations, and testimonials, also help increase your business's conversion rate.

PayPal gambling in unclear legal situation

Bad news for fans of gambling on the Internet: PayPal, the payment service most in-demand among players in online casinos, is becoming increasingly rare as a deposit or withdrawal option.

The popular payment service provider PayPal is increasingly leaving online slots with PayPal. Already affected are 888 Holdings and the industry giant GVC Holdings in EU.

Such a comprehensive exit as that of PayPal raises many questions. While PayPal itself does not give any official reasons for the leaving the market.

One reason is the unclear legal situation of online casinos in Germany. In this regard, the State Treaty on Gambling states that organizing public games of chance on the Internet is prohibited, however, many of the most popular providers come from abroad and have licenses from Gibraltar, for example. In the EU, there is also freedom of services, so that one can speak of a legal grey area, from which the payments processed via PayPal were also negatively affected.

On the other hand, there was probably also an unjustified overuse of PayPal's buyer protection in the event of a loss of stakes, which probably resulted in an enormous amount of checking work for the company. Most recently, however, money spent on gambling was explicitly excluded from the claiming of buyer protection due to the amended terms and conditions.

PayPal reports steady growth during the pandemic

With the COVID-19 situation becoming a global pandemic, there are a lot of changes in the lifestyle of people. Online payments have stable growth till all of this year. On November 02, 2020, global technology platform and digital payments leader, PayPal published a report for the third quarter results for the period ended September 30, 2020.

PayPal reports third quarter 2020 results (Image Source: Depositpp.com)

Q3’20 - the strongest growth in total payment volume and revenue in PayPal’s history:

• Total Payment Volume (TPV) of $247 billion, growing 38%, and 36% on an FX-neutral basis (FXN);
• GAAP EPS of $0.86, up 121% and non-GAAP EPS of $1.07, up 41%
• 15.2 million Net New Active Accounts (NNAs) added; ended the quarter with 361 million
active accounts FY’20: Raising TPV and earnings guidance; delivering record NNAs
• FY’20 TPV growth now expected to be approximately 30%; revenue growth now expected in the
range of 20%–21%, and 21%–22% FXN
• FY’20 GAAP EPS growth now expected in the range of 37%–38% and non-GAAP EPS growth in the
range of 27%–28%
• Approximately 70 million NNAs expected to be added to PayPal’s platform in FY’20
Data source investor.pypl.com

Summary

By understanding the demographics of who is using e-commerce, as well as the trends that are driving sales for e-commerce businesses, it is possible to tap into the multi-trillion dollar market.

Strongly estimated growth in e-commerce means that even if your brick-and-mortar business is able to ignore it now, through 2021, you'll have a hard time if you refuse to adapt to evolving buying behaviour in a world increasingly dependent on mobile devices.

Please gamble responsibly. With many thanks to sources mentioned above for their kind help and support of this article, including the use of their images.

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