Strong holiday sales kickoff
Retailers like Wal-Mart Stores (WMT) and Target (TGT) are hoping for a solid 2016 holiday season, given the already strong start in online holiday sales this year. E-commerce sales took up 25% of consumer spending during this year’s Thanksgiving weekend, according to the analysis of First Data Corp. That compares to 18% during the same period last year and is double what it saw during the same period four years ago.
The US Commerce Department data showed e-commerce sales contributed 8.4% of all retail sales in 3Q16. As such, the fact that e-commerce is only a tiny fraction of overall retail sales suggests a huge growth potential for online retailers. It is estimated worldwide total retail sales will grow 6% to ~$22.1 trillion in 2016.
Mobile driving online shopping
Mobile devices drove a significant portion of online sales this Black Friday holiday. According to Adobe Systems’ (ADBE) analysis, 36% of Black Friday online sales were conducted on mobile phones, a 10% increase over the same period in 2014. Walmart reported 60% of its online orders came through mobile this Black Friday, a 10% increase over last year’s Black Friday.
The deepening penetration of smartphones and the convenience of mobile shopping are backing the increase in online orders made through handsets. Black Friday spending hit $3.34 billion this year, crossing the $3 billion mark for the first time. Mobile contributed $1.2 billion of Black Friday sales this year—a 33% rise over one year ago.
Pressure on delivery companies
With 2016 holiday season shaping up to be a strong one for the retail sector, attention is quickly shifting to delivery services providers. Strong holiday sales mean that United Parcel Service (UPS), FedEx (FDX), and other shipping companies will see strong demand for their services. Amazon.com (AMZN) has been working on building an in-house delivery system to supplement third-party delivery services it uses.