retail news in context, analysis with attitude

Advertising Age has a story about a new report from researcher Sanford C. Bernstein that concludes that e-commerce is "fast becoming a significant market that could shift market share to smaller players and disrupt pricing and other key parts of the industry's business model ... The Sept. 25 report estimates e-commerce sales have risen to 9% of category sales for health products, 5.9% for beauty care and 5.7% for pet care. Those numbers are all up substantially and, in the case of pet products, more than double levels of five years ago, according to estimates developed using Bernstein consumer surveys and proprietary programming tools.

"For much of the category, e-commerce still accounts for 1% or less of sales. But Bernstein predicts online sales will reach $222 billion -- or around 25% of U.S. consumer-packaged goods spending overall -- within five to 10 years."

One interesting byproduct of the disruption has been the way in which some small brands are able to do better online than in stores:

"The top five sellers in manual toothbrushes and breakfast cereals are widely different at Amazon compared to store-based retail, according to the report, based on July 25 sales at Amazon and Nielsen data for the four weeks ended June 7. The niche Radius Totz and Dr. Collins Perio toothbrushes cracked the top 5 at Amazon, but Colgate and Procter & Gamble Co.'s Oral-B products dominated in stores. Bob's Red Mill Gluten-Free Whole Grain Rolled Oats were the top seller on Amazon, while General Mills' Honey Nut Cheerios were the top seller in stores. 'E-commerce seems to be democratizing 'shelf space' as top brands do not dominate the e-commerce channel as much as they dominate brick-and-mortar retail,' the Bernstein report said."
KC's View:
I love the idea of the democratization of the store shelves, as enabled by e-commerce.

The numbers are eye-catching, but I don't think you necessarily have to believe the 25 percent prediction to accept the idea that e-commerce is changing the game for retailers and manufacturers.