Despite an increase in spending, online purchases will erode demand for mail order
Los Angeles, CA (PRWEB) November 10, 2013
The Mail Order industry has struggled through tough conditions during the five years to 2013, with revenue declining at an estimated average annual rate of 0.1% to $95.8 billion. The increasing presence of the internet in the retail market has slowed industry growth as e-commerce websites increasingly attract customers by offering greater convenience and quicker transactions. Furthermore, weak consumer confidence and low disposable income deterred households from making discretionary purchases during the recession, causing demand and sales to fall substantially over the period. Nevertheless, anticipated improvements in economic conditions are expected to relieve some of the Mail Order industry's struggles; IBISWorld estimates industry revenue will rise 0.4% in 2013.
According to IBISWorld Industry Analyst Natalie Everett, “Over the past five years, rising production and delivery expenses have adversely affected industry operators.” These increasing expenses have primarily come from price hikes for coated paper and postage. The price of coated paper has increased at an annualized rate of 1.9% since 2008. Combined with falling industry revenue, these added costs have caused profit margins to fall from 4.2% in 2008 to about 4.0% in 2013. With such faltering profitability, many underperforming operators have been forced to exit the industry or merge with other players. Over the five years to 2013, the number of companies is estimated to have decreased at an average rate of 2.7% annually to 62,748.
“External competition from brick-and-mortar establishments and online retailers will prevent the industry from growing in the five years to 2018,” says Everett. Still cautious from the recession and looking for a quick and convenient shopping experience, consumers will opt to spend their money with online retailers and, to a lesser extent, brick-and-mortar establishments. Further, industry operators will explore their own online and brick-and-mortar retail options to remain competitive, taking them one foot outside of the industry. As such, IBISWorld forecasts that revenue will decline over the five years to 2018.
This highly fragmented industry is characterized by a large number of small operators; the Mail Order industry has no major players. The industry's nature lends itself to this sort of market share structure because it is not very costly to start a mail order store, and mail-order businesses requires fewer skills than a brick-and-mortar establishment. Consequently, market share concentration is estimated to remain low over the five years to 2018.
For more information, visit IBISWorld’s Mail Order in the US industry report page.
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IBISWorld industry Report Key Topics
The Mail Order industry includes companies that use mail catalogs or TV programs to attract clients and display merchandise. The industry does not include companies that generate sales through door-to-door marketing, brick-and-mortar retail or e-commerce.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.