The Rise of E-Commerce
For older inventors, or those with a more traditional mindset, the prospect of selling your product online might only seem like a secondary means of distribution. Brick-and-mortar retailers have dominated the market for countless years, and have generally been considered the primary, coveted landing spot for products. This is especially true when it comes to big box stores like Walmart and Home Depot, which can be extremely difficult to break into. It might not come as a huge surprise if you’re familiar with the modern retail industry, or the specific market for your product, but e-commerce sites like Amazon have become increasingly popular; more shoppers than ever are perusing online catalogs and e-commerce sites, and smart product owners are jumping on board. If you’ve developed a new product and are exploring your options, e-commerce should be a big part of your go-to-market strategy.
E-commerce sales are growing at a rapid clip, and by throwing your hat in the online ring early, you can find yourself in a position to take advantage of this growth. This year, online sales are projected to grow by 15.8%, to $452.76 billion overall. According to eMarketer, this represents 9% of total retail sales. By far, Amazon is the undisputed e-commerce leader, with 43.5% of U.S. retail online sales. They represent 3.9% of all retail sales in the U.S., taking into account both online and brick-and-mortar sales. If you’re considering your options when it comes to exploring online retailers, Amazon should always be front-of-mind.
Although Walmart is generally known for its high volume of brick and mortar stores, it also accounts for 3.6% of U.S. e-commerce sales, and those sales are growing rapidly. Their online sales in 2017 increased 46.8% to reach a total of $16.21 billion. While no product owner should ever rely too heavily on the online stores of big retailers like Walmart and Amazon, and should always explore the alternate avenues as well, these examples are helpful to illustrate exactly how profitable e-commerce has become.
The numbers are particularly staggering for holiday sales. eMarketer forecasts that online holiday sales will jump 11.5% this holiday season to $106.97 billion overall. This is the largest portion ever recorded, and is indicative of pretty striking trend. For most products, the holiday season is usually the biggest selling time of the year—especially for e-commerce—and that’s important to keep in mind when lining up the timing of your product release.
The Big Box Store Illusion
Some inventors are wary of putting too much focus on e-commerce, as their traditional vision of success has always involved a big box store like Walmart, Home Depot, or Lowes. What first-time inventors are often surprised to learn, however—and some learn it far too late—is that getting a product into a big box store is often financially detrimental, and comes with extremely high risk. Unlike e-commerce sites, which generally do not require physical inventory to be shipped to the vendor, large retail stores will ask you to supply a large amount of product—often larger than you’re comfortable manufacturing—and whatever units they don’t sell, they simply ship back to you. In this way, going through big box stores is very low risk for the store, and very high risk for you. You could easily end up with thousands of unsold units on your hands, nowhere to store them, and no way to recoup the manufacturing cost.
While there are no easy paths to market, and you should always expect to encounter unexpected pitfalls, e-commerce is decidedly lower risk, yet still has the power to reach a worldwide audience. For guidance on crafting a go-to-market strategy, and to explore the e-commerce options appropriate for your product, reach out to today.