Internet, TV & Mail-Order Retailers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 40,800 Internet, TV and mail-order retailers in the US sell merchandise through non-store channels, including catalogs, toll-free numbers, the Internet, and television (electronic shopping). Major product categories include drugs, health and beauty aids; computers and software; and clothing and accessories. Examples of Internet, TV and mail-order retailers include Internet auction sites, mail order book clubs, catalog/call center operations, Internet-only retailers, and home shopping networks.
Seasonal Demand
Similar to the traditional retail industry, Internet, TV, and mail-order retailers experience seasonal sales, with peaks during the winter holidays.
Reliance On Information Systems
System interruptions or problems with communications suppliers can result in outages or loss of critical data.
Industry size & Structure
The average Internet, TV, or mail-order retailer operates out of a single location, employs 10 workers, and generates $20 million annually.
- The Internet, TV, and mail-order retail industry consists of 40,800 companies that employ over 420,000 workers and generate $837 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 firms account for about 63% of industry sales.
- Large companies include Amazon, eBay, Qurate (QVC and Home Shopping Network), Plow & Hearth, and L.L. Bean. Many large companies have international operations.
Industry Forecast
Internet, TV & Mail-Order Retailers Industry Growth
Coronavirus Update
May 8, 2022 - Customers may Be Quick To Abandon Purchases
- About 34% of customers who responded to a survey by online payment processor and financial services company Stripe said that they would leave a website if they couldn't buy what they wanted within two minutes, and 13% would abandon their cart if their preferred payment method wasn’t available.
- Orders placed with global e-commerce platforms like Amazon and Walmart may be delayed by virus lockdowns and restrictions in key Chinese manufacturing hubs, according to Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association. Shenzhen, home to around half of all the online retail exporters in China, was locked down for at least a week in mid-April to contain a Covid-19 outbreak. Residents were told to work from home, with all non-essential businesses and public transport shut. Most production has been suspended in Shenzhen and deliveries are snarled because logistics firms and warehouses aren’t operating or are doing so at a reduced capacity, Wang said. Chinese sellers on e-commerce platforms often specialize in cheaper versions of items like phone chargers and sneakers. The country’s cross-border e-commerce industry grew 25% to $220 billion in 2021, building on a 40% surge in 2020 due to the pandemic, according to the Association.
- Sales at physical stores grew faster than e-commerce sales in 2021, according to a New York Times analysis of US Department of Commerce retail sales data. Americans spent 18% more year over year in 2021 on food, cars, furniture, electronics, and other retail products. Online retail sales increased by 14%. The difference indicates that e-commerce lost ground last year to brick-and-mortar stores.
- About 54% of retailers surveyed by Colliers Real Estate Management Services now have an e-commerce platform, up from 27% reported before the pandemic. “E-commerce and physical stores are no longer separate entities,” said study co-author Jane Domenico. “They are being combined to create the best experience for shoppers.” The survey found that 57% of retailers say that e-commerce allows them to sell more products, but only 7% said that online sales are more profitable than in-store sales. Retailers can continue to experience the benefits of both systems. Retailers are also changing the layout of their physical spaces to accommodate the new model. Close to 55% of survey respondents said they are using their stores to fulfill customers’ online orders.
- Click-and-collect sales are expected to increase about 21% to $101 billion in 2022, according to the market research firm eMarketer. Click-and-collect orders are online purchases retrieved through either curbside pickup or inside of stores. They're expected to increase nearly 20% in 2023 to an estimated $120.15 billion. Click-and-collect e-commerce sales are more profitable than other kinds of online sales because they eliminate the cost of delivering packages to people's doorsteps and allow store employees to double as order pickers.
- The nearly 8% increase in postal costs and severe pandemic-related supply chain issues that created shortages of paper, ink, and resin for printers will force mail order retailers to get creative with the channel in 2022, according to industry experts. The US Postal Service reported “steep declines” in mail volume during the pandemic, and without last year’s election, marketing mail volume, including catalogs, would have decreased for the nine months ended June 30, 2021.
- The Conference Board’s Consumer Confidence Index decreased to 110.5 (1985=100) in February from 113.8 in January, which was down from 115.2 in December 2021. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 15.1 from 144.5 in January. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased to 87.5 from 88.8. "Concerns about inflation rose again in February, after posting back-to-back declines," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. "Despite this reversal, consumers remain relatively confident about short-term growth prospects. While they do not expect the economy to pick up steam in the near future, they also do not foresee conditions worsening. Nevertheless, confidence and consumer spending will continue to face headwinds from rising prices in the coming months."
- Traditional retailers that have seen their digital sales channels grow tremendously since the start of the coronavirus pandemic are investing heavily to compete more effectively with pure play internet retailers. Target has announced plans for two more regional distribution centers in addition to the two distribution centers it expects to open this year. The company is also planning for five more sortation centers. Sortation centers receive packages from stores and organize them by zip code for local delivery. Walmart is testing a last-mile delivery network of vans to get packages from its stores or distribution centers to customers' homes. Analysts say that the ability to offer similar fulfillment speeds on a comparable selection of items may grow in importance for Walmart and Target to keep their customers' loyalty as more shopping moves online.
- Non-store retail sales, which include internet and mail-order retailers, decreased 6.4% in value month over month on an adjusted basis but increased 2.6% on an unadjusted basis in March. The sales data measures dollars spent at US businesses, so the increase partly reflects inflation in the cost of everyday products from food to gasoline. Consumer prices are increasing at the fastest pace in years, a phenomenon largely attributed to the uneven reopening of the global economy.
- Employment in the electronic shopping and mail-order retail industry increased 5.1% year over year in March, according to the US Department of Commerce.
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