Consumers Will Spend $327 Billion Online in 2016: Forrester Research

If you were living under a rock -- or busy celebrating Leap Year -- you may have missed the following significant projection from Forrester Research at the end of February: U.S. consumers will spend $327 billion online in 2016, up from $202 billion last year. I think it’s so significant I’m going to say it again: U.S. consumers will spend $327 billion online in 2016. Driving online retail growth will be increased spending online by consumers; dramatic increase in mobile technology usage; innovative online sales; and loyalty and free shipping programs, the report says.

In the report: US Online Retail Forecast, 2011 To 2016, online retail continues to grow aggressively, having topped $200 billion in 2011,” says Forrester Vice President / Principal Analyst, Sucharita Mulpuru, adding that Forrester expects online sales will grow from 7% of overall retail sales to close to 9% by 2016. 


To summarize at a glance, that works out to: $202 Billion in 2011; $226 Billion in 2012; $252 Billion in 2013; $278 Billion in 2014; $304 Billion in 2015; and $327 Billion in 2016.

The surveys further revealed:

53% of US population -- 167 million people -- purchased something online in 2011

56% of US population -- 192 million people --WILL purchase something online in 2016

Average yearly online spending in 2011 -- $1,207

Average yearly online spending in 2016 -- $1,738

Key drivers of this growth, according to Mulpuru, include consumers' greater comfort level with purchasing various categories online, and broader web shopping capabilities with mobile and tablet devices, further citing: 

1. “Ubiquitous mobile web capabilities”. As smartphones become increasingly popular with consumers, the ability for consumers to access instantaneous information about prices or products while they are on the go or in stores is unprecedented. Furthermore, our estimates are that only 9% of web buyers currently have tablets, these shoppers convert at much higher rates than smartphone shoppers.

2. Innovative new business models, like flash sales and subscription models that divert spend away from physical stores. An earlier study that Forrester conducted with online shoppers showed that the majority of consumers said they spend less at traditional retailers after shopping at daily deals sites.

3. Online loyalty programs, and aggressive promotional offers from web retailers. While over the years physical stores and brands have managed to capture greater shopper data with loyalty programs and private label credit card programs, online retailers such as have essentially created loyalty programs of their own with shipping clubs. This where members pay a flat annual fee and receive all their shipping for the year for this price.

4. Aggressive deals, particularly during the fourth quarter. During key time periods in the last holiday season (e.g., Thanksgiving, Cyber Monday), more than 70% of online holiday buyers (in a joint survey with Bizrate Insights) say that they purchased online instead of in stores because deals online were better.

Bottom Line:

The numbers are coming -- big time. If you want to be competitive in the online retail world, build on the clues above: Be mindful of the ubiquitous and growing mobile web capabilities. Look for new shopping models that are unique to online retail. Develop more and more loyalty programs to keep that shopper coming back to you again and again.  Offer more deals in timely and judicious fashion. Remember, you’re not functioning in a vacuum. Be ever-aware of what your competitors have and what they’re charging; and certainly be aware what they’re doing in the online competitive market. Plan and function accordingly, continuing this marathon if you want to be the best prepared, best trained, best-informed, and most competitive online retailer. 

What do you think of these new statistics?  Let me know, below.  Gilon 

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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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