Consumer Electronics Purchases: Retail Stores v Manufactures
According to NPD’s Checkout, a consumer receipt mining service, online sales of consumer technology went up by 19% in the first 9 months of 2017, versus the same time period in 2016. In 2017, Direct-to-Consumer (DTC) sales recorded the highest growth in the consumer electronics space, increasing by 34% and representing 13% of all e-commerce sales in the space.
Data sourced from Zion Market Research revealed that the consumer electronics industry had a global market size of $1.172 trillion in 2017. This amount is projected to grow at a CAGR of 6% to reach $1.787 trillion by 2024. Internet Retailer estimates that, in 2018, e-commerce sales accounted for 15.2% of the total global retail sales which stood at $18.84 trillion.
CALCULATIONS AND STRATEGY
To calculate the 2018 global market size of consumer electronics, a CAGR calculator was used, where the CAGR = 6% as stated earlier, the number of periods = 2018–2017 = 1, the initial value = $1.172 trillion, and the final value equates to $1.24 trillion, which is the required 2018 global market size of consumer electronics.
Assuming that the 2017 e-commerce share (15.2%) of global retail sales ($18.84 trillion) is applicable to the space of consumer electronics, then, it follows that 15.2% of the 2018 global consumer electronics sales were made through e-commerce channels. That is, 15.2% of $1.24 trillion = 0.152 * $1.24 trillion = $188.48 billion. This is the 2018 estimated value of consumer electronics sales made through e-commerce channels.
Considering that DTC sales account for 13% of all consumer electronics sales made through e-commerce channels, then, the global consumer electronics sales made through DTC channels equates to 13% of $188.48 = 0.13 * $188.48 billion = $24.502 billion.
The global consumer electronics sales made through third-party retail e-commerce channels = $188.48 billion—$24.502 billion = $163.978 billion. The ratio of consumer electronics sales made through third-party retail e-commerce channels to those made through DTC channels = $163.978 billion : $24.502 = $6.692 : $1 (expressed in the lowest terms). Thus, for every consumer electronics sale of $6.692 made through third-party retail e-commerce channels, a corresponding consumer electronics sale of $1.00 is made through DTC channels.