As a 21st century consumer, you've probably purchased almost anything online at least once before.
Whether it's groceries, paper products, pet food, personal care items, furniture or fashion, Americans are buying more products online than ever. The trend shows few signs of changing course.
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This is partly due to the change in purchasing behavior that began during the pandemic. When brick-and-mortar stores were forced to close indefinitely, online retailers ramped up production. And if a store didn't have strong online operations, it had to quickly expand its online fulfillment efforts or be left behind.
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Of course, many smaller retailers were quickly gobbled up by larger corporations that simply could afford to be more nimble in unforeseen circumstances.
Walmart (WMT) For one thing, it quickly began using many of its stores as online fulfillment centers where it could ship orders to their final destinations much faster due to the ubiquity of store locations: more than 90% of people in the USA live less than 10 miles from a Walmart.
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amazon AMZN now beats every other retailer in terms of online shopping. Its e-commerce business has grown approximately $109 billion since 2020 and accounts for more than a third of all purchases made online in the United States.
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Online shopping still has a clue
However, believe it or not, online shopping and e-commerce retailers still have room to grow.
Although they have had great success in the last five years, retailers like amazon can still grow even more. The grocery store is a great example here; Most people are still quite reluctant to buy food online. Delivery can be expensive, bottom line results and customer satisfaction are mixed, and most food is still perishable, meaning time is of the utmost importance. Unlike a bar of soap or a book, a gallon of milk can't sit on your front door for hours in the sun.
The electronics are also complicated. It is estimated that around 30-40% of electronics are purchased online, primarily through amazon or a handful of other direct-to-consumer giants.
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But amazon hasn't captured the market completely. While many people can buy headphones or a smart TV on the site, they don't look to amazon for all their purchases. Consider how useful it is to go in person and test the quality of a television or the audio quality of a new, expensive pair of headphones.
There is still room for brick and mortar here.
Best Buy launches cool new marketplace
Of course, Best Buy (BBY) is the leading leader in the physical electronics store space. It has enjoyed relative dominance in the market for years, but as interest in brick-and-mortar stores wanes, so does its market share.
That's why Best Buy announced it will launch a third-party marketplace in 2025 to sell electronics and potentially expand into other products.
“We have an established and growing third-party online marketplace in Canada, and we're planning to launch one in the U.S. in the middle of next year,” Best Buy CEO Corie Barry told analysts in a recent results conference call.
“We believe that as a trusted leader in (consumer electronics), we have the opportunity to leverage our positioning and assets to build a differentiated digital marketplace platform, thereby providing our customers with access to a much wider variety and new categories. Additionally, marketers and advertisers will have an additional avenue to increase their reach and build their brands by leveraging our qualified traffic.”
Best Buy attempted to launch a similar product in 2011, but ultimately closed it five years later in 2016 as amazon gained market share. This service plans to offer more products and services to customers, such as technological accessories such as phone cases or wellness accessories.
But the deeper you delve into what you do best (consumer electronics and their associated accessories), the more you can earn, some analysts say.
“I think Best Buy will add a lot of unique millennial eyes that are already shopping there; “These are really wealthy customers, much wealthier than Target and Walmart, even amazon,” said Megan Potts, founder of Triforce Digital Partners.
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