Article | Intelligent Investment

How Does E-Commerce Vary by Product Category?

16 May 2022 4 Minute Read

By Brandon Isner

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E-commerce retail sales have been rising an average of 16% annually since 2010. Although the steep increase in e-commerce’s share of total retail has leveled off, digital sales will continue to redefine retail.

The impact of e-commerce has varied among product category and type. Understanding the differences in digital adoption can help retailers and investors refine their growth strategies and investments in their business.

E-Commerce Sales by Product Category

Analyzing the distribution of online sales by product category is a necessary first step in understanding the retail logistics network.

Of the estimated $871 billion in online retail sales in 2021, the two largest contributors to the total were clothing and consumer electronics. The categories which are expected to grow the fastest through 2024 are furniture (+22%) and food and drink (+30%).

Figure 1: E-Commerce Sales by Product Category

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Source: Forrester, 2021.

E-Commerce Share by Product Category

A second approach to understanding e-commerce variance is to analyze what share of e-commerce sales each product category owns of their total retail sales across all channels. Retailers use these methods to streamline their supply chains.

In 2021, the categories with the highest penetration were media-related, such as video games, books and movies. Electronics and small appliances also showing significant ranking. The categories which remain the most fixed within brick-and-mortar channels are food and drink, over-the-counter drugs, tools/home improvement, furniture and jewelry and watches.

Figure 2: E-Commerce Share by Product Category

Source: Forrester, 2021.

Real Estate Implications

Retailers that specialize in product categories with high e-commerce penetration have likely invested significantly in their supply chain. There are opportunities to do the same within their retail footprint, ensuring that their store network is optimized with mobile devices for brand exploration and research. Additionally, upgrading in-store return capabilities, which can be a retail differentiator, can offer more customer interaction and additional sale opportunities.

Implications for landlords have been on display throughout the U.S. within the regional mall format, where efforts have been made to adjust the store mix from traditional occupiers to more foot-traffic-focused retailers such as restaurants and services.

Investors are monitoring the implications of the changing focus of retail. The emphasis on grocery-anchored shopping centers is well-known and remains the gold standard of retail capital markets. Although food and drink is expected to be the highest-percentage growth category for total online sales, it remains the category with the lowest online share of total sales and is expected to remain the lowest though 2024.

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