1. Top 3 largest categories (Food & groceries, motor vehicle & parts, furnishing) contributing ~50% to total retail have least online penetration and contribute just 19% to overall online retailing market.
2. Top 3 smallest categories (Books, hobby & toy, electronics & appliances) contributing ~4% to total retail have highest online penetrations and contribute 33% to overall online retailing market.
3. Apparel category does not have a very high online penetration (~13%) but contributes 17% to overall online retailing market.
Having such observations, we thought it would be interesting to understand what makes certain categories click online. To be a successful category in online, business model should make sense (otherwise pricing would be affected) and customer value should be enhanced or customer should have similar experience to offline shopping. For example- if a customer wants to touch & feel certain product, online selling of that product will be difficult. So, we tried to break all categories into value for the customer value and business model for the company and analyzed different attributes of each category.
Next, we plotted each category on a 2X2 matrix of customer and business centric axes.
From the graph and observations, it is evident that online retail is better able to penetrate in categories which have higher value to customers. So books, hobby & toys and electronics & appliances are top 3 online categories while furnishing & hardware, motor vehicle & parts and food, beverages & groceries are least favourite categories in US.
Obviously, this analysis doesn’t include availability as an attribute. But, if a product is available only through online channel, it enhances the customer value drastically.