e-Commerce Stock Outlook – Feb. 2012 – Industry Outlook

The Electronic Commerce, or e-commerce, industry is one of the fastest moving sectors of the economy. The industry is evolving very rapidly, so data collection and evaluation are particularly difficult. Consequently, one has to rely largely on surveys by both government and private agencies.

According to the U.S. Census Bureau, the manufacturing sector is the largest contributor to e-commerce sales (42% of their total shipments), followed by merchant wholesalers (23.4% of their total sales). These two segments make up the business-to-business category.

Retailers and service providers generated just 4.0% and 2.3%, respectively, of their revenues online, a slightly higher percentage than they were in the prior year. The Bureau categorizes these two segments as business-to-consumer.

The business-to-business category makes up 91% of total e-commerce sales, with the balance coming from the business-to-consumer category. The fastest-growing segments were manufacturing and services. [All the above data from the U.S. Census Bureau relate to 2009, as published in May 2011.]

Key Drivers

Since the industry is in evolution, the drivers are varying, or changing flavor. For instance, the initial push came from the time savings and convenience of online transactions. To this were added the benefits of comparison shopping and personal recommendations. As technology required for personalized recommendations developed, became more available and its benefits more evident, most "e-tailers" started adding the feature until it is now considered a must-have.

Today, the biggest driver of growth in the industry is the adoption of smartphones, tablets and other mobile Internet devices. Smartphones continue to lead the way all over the world, although tablets are growing very fast, followed by other devices.  comScore estimates that non-computer Internet traffic in the U.S. was 6.8% in August 2011, with smartphones accounting for two-thirds and tablets accounting for most of the rest. Other countries with significant Internet traffic through non-computing devices include Singapore, the U.K., Japan, Australia, Canada, Spain, India, France and Brazil, in that order.

In the fourth quarter of 2011, over 47% of U.