More Americans Are Shopping Online, So Why Are Digital Retailers Struggling?

While the main headline of the 2015 holiday season was about the explosive growth of digital commerce, a sub-detail of that fantastic news often goes unreported.

When it comes to buying and selling online, fortunes are rather unequally distributed.

According to a new report jointly release by Shop.org (the NRF’s eCommerce division) and Forrester research, it is increasingly difficult for online retailers to get meaningful growth underway.

According to the recently released data, 17 percent of online retailers reported flat sales in 2015, up sharply from last year’s 3 percent.

“Much of this is due to more retail competition than ever before. More than 800,000 online stores in the U.S. alone are now vying for recognition, market share and relevance with assortment,” noted Forrester e-retail analyst Sucharita Mulpuru.

E-tailers have also faved increasingly bargain-savvy consumers who will wait it out far more often than they will pay full price.

“During days like Thanksgiving and Cyber Monday, more than 90 percent of shoppers purchased with some deal or promotion like free shipping or a discount,” the report noted.

More importantly, the report noted that while online business are relatively low cost to launch, the costs of scaling are much higher with exponentially increasing costs along the way.

And although not explicitly mentioned in the report, Amazon casts a long dark shadow over the landscape, given that a recent report by investment firm Macquarie Research concluded that Amazon would account for 51 percent of U.S. online sales growth in 2015 and 24 percent of all U.S. retail growth.

The report does not paint the picture as irredeemably bleak for independent online commerce businesses, though it does advise caution.

“Audit where things may be falling apart,” Mulpuru writes in the report, “and determine what needs to be done to fix them.”