Are Record E-Commerce Sales in the Third Quarter Good for Cyber Monday?

With a solid economy and strong labor market, Black Friday retail sales were likely strong.

And the outlook for Cyber Monday is even stronger!

After all, U.S. GDP growth was at a solid rate of 3 percent in Q3 2017, while October 2017 unemployment was just 4.1% - the lowest rate since December 2000.

So people have jobs and some money to spend this holiday season. And they're going to be spending a chunk of it on Cyber Monday!

E-Commerce Boom

E-commerce has been very strong this year leading up to the holiday season. In fact, data released just last week by the U.S. Bureau of the Census showed that e-commerce sales hit a new all-time high in Q3 2017 at $115.3 Billion.

So, with this level of e-commerce sales, is brick and mortar dead?

Not so fast!

Despite the record level of U.S. e-commerce in the third quarter of 2017, e-commerce still represented only 9.1 percent of all retail sales. This still leaves 90.9 percent of total retail sales still in the brick and mortar world.

E-commerce percentages of total retail are still relatively low, because some retail sales have so far been a bit more difficult to transition to e-commerce, including car dealer sales, gas station sales, grocery and beverage store sales, and restaurants. Combined, these categories accounted for more than half of all retail sales in the third quarter.

But a number of startups are working to bring these sectors to the online world: from vehicle sales to grocery and restaurant sales – and even to fuel sales! E-commerce is coming to these sectors as well.

Plus, there's another sign that brick and mortar is not dead: Amazon, which has been at the vanguard of the e-commerce revolution, has been opening physical stores.

The two types of stores Amazon has opened in the past couple of years (aside from the Whole Foods acquisition) have garnered a lot of attention. And they are at the opposite ends of the retail spectrum: Amazon Go and Amazon Books.

Amazon Go

The concept store for Amazon Go was opened in Seattle in December 2016, and it allows shoppers to buy groceries without ever having to go through a checkout line. Technology in the store recognizes when you take something (or put it back), and you are charged automatically for goods in your possession, when you walk out of the store.

You might enjoy grocery shopping because you — like me, like everyone — are a commodity fetishist at heart. You want to go buy stuff, and you might prefer to buy food in person because it’s produce; you want to see and touch it, before you buy it. Even as more retail goes online, restaurants, food service, and grocery stores have remained critical parts of the physical retail economy. But that, too, is changing.

Since grocery store kiosks have largely been a failure, automated shopping with instantaneous checkout presents upside opportunities to liberate your time — as does food delivery.

Upside for Retailers

There are also significant potential benefits to retailers from this kind of store, because it could reduce theft and waste. Theft risk would fall, because it would be more difficult for shoppers to leave the store without paying for items. Meanwhile, waste could fall, since inventories could be monitored in real time, and restocking could be done with just-in-time orders.

High Curation or Products

In stark contrast to the light touch of Amazon Go, Amazon also opened some brick and mortar bookstores in 2017 under the moniker Amazon Books. the first store was opened in Seattle in 2015, and I had the opportunity to visit one in Manhattan in May 2017. There's even one coming to the Domain in Austin in 2018.

It was unlike any bookstore I have ever visited in the past.

The difference: How highly curated the selections were.

There was a relatively low number of books, but each one had very high ratings. Additionally, all books faced outward on their shelves, and there was a lot of space between each stack of highly ranked books.

There was no jumble of book spines.

There was no struggle to look for something. All the books were facing outward; looking right at you with a five-star review underneath written by a real person (Kathy, Ed, Tom, etc.). It felt a bit strange, and this experience hints at a potential future where cultural curation of literature could follow the trend of curation set by movies. 

Have you noticed that a lot of movies in 2017 were sequels, a reboot, or otherwise part of a series?

Yeah, that could happen to books, too.

The Downside

Imagine books and literature being subjected to the same level of intentional curation, where the only books you will ever find in the stores will be ones with 100+ five-star reviews.

That would eliminate the potential for a quirky and enjoyable literary find.

It could lead to cultural homogeneity and a level of blandness that plays to the middle.

That seems to be a real downside risk for curated retail in all of its forms.

Implications for E-Commerce

As we consider Cyber Monday 2017, two things seem certain about e-commerce:

First, the absolute level of e-commerce sales, as well as the percent of goods sold as e-commerce are likely to rise much further in coming quarters.

Second, even though online retailers may move into brick and mortar, it is unlikely to become their bread and butter. Year-over-year growth rates for e-commerce are just too high.

After all, e-commerce sales were up by +15.5 percent in the third quarter of 2017, compared to the third quarter of 2016, while total U.S. retail sales were up by a much lower rate of only +4.0 percent year over year across the same period.

How much will you be ordering online this Cyber Monday?

Are you worried about curated shopping experiences - or do you prefer them?

I'd love to hear your thoughts.

-Jason Schenker

Tags: #CyberMondaySales #CyberMonday2017 #BlackFriday2017 #MallsHoliday #CyberMonday #BlackFriday #ECommerceSales #jobs #economy #unemployment #futureofwork #workforce #education #JobsForRobots #LinkedInLearning

This article is an excerpt from Jason Schenker's book, Jobs for Robots.

Jason Schenker is ranked the world's leading Financial Market Futurist. He is the President of Prestige Economics and the Chairman of The Futurist Institute. 

Jason is also an instructor for a LinkedIn Learning course on Financial Risk Management.