E-Commerce Rises 12% in Q1

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E-commerce revenue is not rising at the high double-digit rates it was several years ago, but it is still rising faster than retail in general. At about the same time that Wal-Mart Stores Inc. (NYSE: WMT) announced that its same-store sales were down in the United States in its most recently reported quarter, research firm comScore reported that desktop retail e-commerce spending rose 12% in the first quarter of this calendar year.

The research operation reported:

Q1 2014 saw desktop e-commerce spending rise 12 percent year-over-year to $56.1 billion, marking the eighteenth consecutive quarter of positive year-over-year growth and fourteenth consecutive quarter of double-digit growth. M-commerce spending on smartphones and tablets added $7.3 billion for the quarter, up 23 percent vs. year ago, for a digital commerce spending total of $63.4 billion in the first quarter.

Spending on portable devices has surged as people move away from PCs as their primary computing and communications devices.

At a 12% growth rate, both e-commerce firms and brick-and-mortar companies need to become concerned that the market is not expanding quickly enough to support their revenue goals. Amazon.com Inc.’s (NASDAQ: AMZN) revenue rose 23% in its most recent reported quarter to $19.74 billion. Its challenge may be that, despite its massive size, it needs to substantially outgrow its industry to continue its unprecedented success.

The modest growth rate is an even larger challenge to the country’s largest retailers. As their store sales falter, they have nowhere to turn but online. A moderating in e-commerce growth means the traditional retailers need to take larger and larger market share of U.S. online sales to balance the death of traditional retail.

E-commerce growth was bound to slow down. Almost no market can continue to expand as rapidly as it has since the advent of broadband. As its growth slows, the retail industry in general will lose its only real chance for overall growth.

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