Amazon to dominate holiday e-commerce

Christmas decorations
Holiday e-commerce will rise 10%, yet Amazon will still capture one-third of all sales.

E-commerce sales are expected to rise 10% this holiday shopping season, down a bit from 11% in 2016. Amazon will see the largest share of that bump, about one-third of the sales. 

NetElixir has released its annual Holiday Forecasts report and attributes the slight drop in digital shopping to the three factors: First, Amazon's growing user base and inclusion of a Prime Day in July have consumers shopping throughout the year for gifts. Second, lower prices on marketplaces means that overall retailers lose a bit. And third, looking at the macroeconomics of this year, sales have slowed down and the first half of the year witnessed a considerable amount of store closings.

The report also predicts that Amazon will take 34% of all holiday sales this year, up from 30% in 2016. That percentage equates to $28.5 billion in sales, compared to $23 billion in 2016. All other retailers combined are estimated to make $2.5 billion in holiday e-commerce this year. 

But don't be fooled, the slow down in the rate of e-commerce growth is only temporary as digital shopping continues to reshape in light of Amazon's moves. But NetElixir believes digital will continue to grow and grow as more and more people transition from offline to online.

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Mobile shopping will also have a growth year, as NetElixir predicts that mobile will account for 35% of purchases. 

And although the shopping period between Thanksgiving and Christmas will be unusually long, the prediction is that consumers will still wait until the last minute, December 20 through 22, to purchase gifts.

“With Amazon continuing to play a huge role in e-commerce consolidation, retailers need to prioritize e-commerce in order to stay competitive during the holiday shopping season,” said Udayan Bose, founder and CEO of NetElixir. “There are also some expected consumer behaviors that retailers can leverage, like the higher percentage of consumers who will make last-minute purchases before Christmas. We also found that post-Christmas purchases, otherwise known as “me buys,” are going to experience a substantial increase this year, giving retailers an opportunity to reap some of their losses from the holiday period.”

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Going into the holiday season, Bose warns there will be challenges: Balancing how much and what to sell through marketplaces or retailers’ own websites; planning promotions for a longer than usual Thanksgiving to Christmas time period; a smart free shipping strategy; and maximizing the local plus mobile effect.

So what does this all mean for brick-and-mortar stores?

"They will have to reinvent themselves," Bose told FierceRetail. "Are stores going to be distribution hubs, or showrooms that build brand experience or social meeting places? The decisions the stores make will depend on their strategic brand visions."