By Karina Masolova
Over $11 billion in licensed merchandise was sold through e-commerce retail channels in the U.S. and Canada in 2015, according to The Licensing Letter’s Annual Licensing Business Survey.
Factoring out automobiles and fuel, the U.S. Commerce Department estimates that 10.5% of all U.S. retail sales in 2015 were made online. In contrast, TLL estimates that e-commerce comprised 11.4% of licensed sales. This figure includes sales through online-exclusive retailers like Amazon.com, Café Press and Zappos; traditional brick-and-mortar retailers with e-commerce sites such as Target, Wal-Mart and Sephora; and smaller branded websites run by e-commerce service providers.
Although e-commerce ranks as only the 5th largest retail channel overall, it is the fastest growing retail channel. As shelf space in brick-and-mortar stores shrinks and the TV shopping and mail order channels have declined, brands increasingly finding success online. Over the last couple of years, an agent notes, “brands that have never gotten into licensing before now are doing so because e-commerce.”
The biggest barriers for brands, according to Survey respondents, are the technical problems posed with building engaging e-commerce sites, including mobile support. Several agents and licensees were enthusiastic about partnering with Amazon.com, citing affordability, ease of use, Google AdWords support and access to data-mining tools.
E-commerce Sales by Product Category
The Survey breaks out retail sales by distribution channel for five major property types; trademark/brand, entertainment/character, fashion, sports and art. While no one property type depends on e-commerce exclusively for retail sales, entertainment/character (15.6% of retail sales through e-commerce) and art (11.6%) have an above-average share of merchandise sold online.
By sheer dollar value, more licensed trademark/brand merchandise is sold online than from any other property type ($1,908 million), despite the fact that e-commerce sales rank sixth amongst retail channels for the property type.
Amazon.com Leads E-commerce Growth in CPG
Amazon accounted for 26.1% of all U.S. e-commerce sales in 2015, according to Internet Retailer estimates. And 1010data claims that the giant’s Subscribe and Save feature is single-handedly responsible for over 20% of the growth in consumer packaged goods (CPG; includes health and beauty, food and beverage and other categories with low margin, high volume on-durable goods).
While sales of CPG grew 42% in 2015, outpacing the growth of total e-commerce’s 30% increase, 1010data says that the actual starting dollar figures are low—less than 10% of e-commerce sales are for CPG.
The biggest category within CPG is pet food, which grew 55% in 2015 to $760 million in U.S. e-commerce sales, according to 1010data. Facial moisturizers came in second with $450 million in e-commerce sales (up 25% over 2014), and fragrances third with $330 million in revenue (11% higher than 2014). The fastest-growing brand among those with more than $5 million in annual sales was Amazon’s own line, Amazon Elements.
New Breed of Shopper: Mobile-only
A Google study with Ipsos showed that 82% of shoppers consult their phones on purchases they’re about to make in a store. Sports and fashion brands have been especially keen on building connected shopping experiences, where consumers can seamlessly move from researching on mobile to fulfilling purchases in brick-and-mortar locations. Most e-commerce studies do not include these sales in e-commerce retail studies, but Google data suggests that the greatest growth areas for this strategy are for local stores.
There is a new breed of consumer in strictly cyber commerce; comScore estimates that 11% of online shoppers buy exclusively through mobile, outnumbering desktop-only shoppers who make up 10%. Most (80%) shoppers use both mobile and desktop in their shopping experiences. Looking forwards, Forrester Research estimates that mobile will make up 54% of all e-commerce sales in 2018.