The Five Categories that Dominate eCommerce—and the Trends that Distinguish Them

These days, an ever-increasing number of people buy all sorts of products online, from ovens to vitamins to school supplies. While eCommerce overall is growing, each eCommerce category is unique, with its own challenges, trends, and opportunities.

In this blog post, we will break down the five biggest eCommerce categories and dig a bit deeper into industry trends. At the end, we’ll take a look at the trends that carry across categories and are likely to define eCommerce over the coming years.

1. Fashion

Even though the online fashion industry has grown less than it had in previous years thanks to an overall decrease in consumer spending, fashion still tops the charts in terms of eCommerce sales. Worldwide, consumers are predicted to spend $759.5 billion on fashion in 2021, accounting for more than one in four dollars spent by online shoppers.

During the COVID-19 crisis, many consumers cut back on non-essential spending. In March of 2020, 27% of US consumers said they planned to spend less on luxury and fashion items. As consumer spending increases again in the wake of the pandemic, the fashion category is expected to pick up and become one of the fastest-growing categories once more.

Unlike clothing sales overall, loungewear and athleisure actually saw a surge during 2020. Now that many people are returning to in-person activities and work, the demand will likely grow for all the fashion categories that languished the previous year.

Global fashion markets are on the rise as middle classes emerge outside the West. These new consumers have disposable income and increasing access to smartphones—six out of ten shoppers take into account mobile support when they decide which brands to purchase from. Multi-channel fashion retail leverages this shift to mobile eCommerce by allowing customers to shop via social media, messaging apps, and marketplaces.

Celebrity and influencer culture will only increase its impact on the eCommerce fashion industry in the future. Shoppers gravitate toward brands that have a customer-centric online presence. These brands don’t simply offer ads that highlight the brand but instead use a combination of product-centric content, mainstream influencer marketing, and micro-influencers.

Customers now expect a more personalized, curated online shopping experience than ever before. One way successful brands are creating this experience is through the use of artificial intelligence to recommend individualized products and deals to customers. Virtual assistants and chatbots are integral to converting browsers into shoppers—and cutting back on item returns—by ensuring customers feel taken care of.

2. Toys, Hobby, and DIY

The online toys, hobby, and DIY category continues to grow as consumers prioritize spending on their families and personal interests. In 2021, 21% of consumers are spending more on toys and games than they had previously, adding up to over $590 billion in purchases in this category throughout the year.

While this category still currently generates more sales through brick-and-mortar stores than eCommerce, the situation is expected to reverse by 2022.

Many consumers prefer to shop online for products in this category, especially if they’re searching for niche hobby or collectible items. Customers also enjoy the ability to read product reviews, compare prices, and have access to a wider range of products and brands than they would in a brick-and-mortar store.

Social media is a huge driver for sales in this category, with platforms such as TikTok, Instagram, and Facebook dominating. The majority of online shoppers prefer to use their mobile devices to browse, compare prices, and make purchases.

When buying toys, sustainability, including environmentally friendly and ethical production, is a growing concern for many consumers. Parents are making more purpose-driven purchases, hoping to teach their children about environmental responsibility. Children across all age groups rank the environment in the top ten issues they’re most concerned about, and many toy companies have responded by pledging to reduce carbon emissions.

Like the fashion market, the toys and hobbies industry is becoming more global. China grew to become the biggest regional market for this category in 2020, surpassing the United States and Europe.

3. Electronics and Media

While this category ranked second in the United States, it sits at third place globally. With $542.4 billion in sales projected for 2021, electronics and media is a behemoth category in the world of eCommerce.

Electronics and media, which includes computers and consumer electronics as well as books, music, and video, is the only category that generates the majority of its revenue through eCommerce. This trend solidified in 2020 and continues to hold fast in 2021.

It’s also, notably, the category for which Amazon controls the majority of US eCommerce sales. In 2021, 83.2% of online sales of books, music, and video were made through Amazon, as well as 50.2% of online purchases for computers and consumer electronics.

Amazon currently has over 200 million Prime subscribers, who have access to video and music streaming as well as free delivery, which is an even higher priority for electronics shoppers than other categories. Amazon has also sold between 20 and 90 million Kindle e-readers since launch, which has allowed it to control between 67 and 85% of the e-book market.

Thanks to the global pandemic, US adults spent nearly 8 hours online per day in 2020. This shift to the digital world drove explosive growth in online electronics and media sales throughout the year, and the growth is expected to continue even as the pandemic subsides.

As many workers shifted to remote work, their purchases of consumer electronics were geared toward creating a better work environment. Hybrid working will continue to dominate in many industries, so these types of products will likely see continued growth. Meanwhile, the demand for PC gaming increased as well.

Consumers are getting better at finding good deals as they gain experience shopping online for electronics. Consequently, loyalty to specific retailers has fallen, while specialty discount electronics websites are seeing growing revenue.

4. Food and Personal Care

It’s no surprise that online sales of essentials like food and beverage as well as personal care products would see enormous growth while consumers were confined to their homes. In 2021, $468.5 billion is expected to be spent in this category, making it one of the fastest-growing in the market.

Even as physical stores reopen, many customers continue to opt for buying groceries, medications, and other essentials online to save time and avoid crowded stores. Online customers also enjoy access to a wider selection of products and brands.

Since health and wellness products are embedded into customers’ routines, repeat purchase rates are higher than in many other industries, and online shoppers can become lifetime customers. Subscription services or recurring purchase fulfillment is becoming more popular in this category.

When it comes to beauty and personal care, more people are willing to pay higher prices for higher quality—nearly one in four consumers are spending more on beauty and personal care than they did previously. The top 20 manufacturers of these products have almost complete control of traditional retail, where shoppers turn when they prioritize lower prices. However, eCommerce is allowing other manufacturers to establish a foothold in the industry as buyers who value quality are more likely to shop directly from a brand’s website.

Before the COVID-19 pandemic, food and beverage makers tended to sell mostly through chain store clients rather than direct-to-consumer eCommerce channels. In 2020, following the huge drop in physical store shopping, food and beverage became the largest online consumer packaged goods (CPG) segment. This trend is expected to continue into 2022.

Consumers have indicated that they plan to increase their physical and mental wellness by eating and drinking more healthily in the wake of the pandemic. Superfoods are a major trend in the industry in 2021, while sales of alcoholic beverages, which spiked in 2020, are now decreasing. Health goals and concerns about climate change are driving an increased demand for plant-based products. The organics industry, once considered a luxury segment, has been growing despite the global recession.

At the same time, customers are growing more cost-conscious about their groceries, with 71% of people actively searching for new brands and products that could offer better deals than established brands. Consumers are also on the lookout for brands that offer greater transparency about the ingredients that go into products and the manufacturing process companies use. This is an excellent time for new brands to connect with customers whose values and needs they can address.

5. Furniture and Appliances

Shopping in physical stores for furniture and appliances used to mean that customers would have to visit multiple locations before making a purchase to compare products and deals. Now, with a projected $362.9 billion in revenue in 2021, the furniture and appliances category has become the fifth-largest global eCommerce category. Shopping online for these products is faster, easier, and offers a more personalized experience.

Virtual reality has become an interesting trend in eCommerce, but it offers special benefits in the furniture and appliances category. Customers can use VR to see what a new refrigerator or armchair would look like in their house before making a decision, a huge benefit over what traditional retail can offer.

While demand for new furniture, housewares, and home decor spiked during 2020 as many households adapted to spending more time at home, growth is expected to slow between 2021 and 2025. However, in the United States, a greater demand in the housing market as well as advanced shipping infrastructure and larger homes will drive the eCommerce share of this category to 23% by 2023.

This slow-but-steady growth of the industry provides ample opportunities for new brands. The home goods industry has much lower brand loyalty than other industries such as beauty and fashion, which gives new and emerging brands the chance to compete with established giants.

Comfort and luxury is dominating the home goods market, including eco-friendly and ethically sourced items. Meanwhile, smart appliances and all-in-one cookware are in increased demand as more people have shifted to home cooking.

Despite the increasing popularity of online shopping for furniture and appliances, 56% of consumers still prefer to buy these products in a store versus 33% who prefer online. As a result, online furniture retailers have begun developing showrooms for consumers to try out products and ask questions before making purchases online.

Shared Trends

While each eCommerce category is unique, they share many similar challenges, opportunities, and tendencies.

  • Adaptation. The events of 2020 caught every industry by surprise. Traditional brands were forced to move online and sell directly to consumers. Even primarily eCommerce brands encountered unexpected challenges, such as lower consumer spending thanks to a loss of income, and shifting priorities from their customers, such as a heightened demand for loungewear and health and wellness products. Now as the world is beginning to emerge from the pandemic, many eCommerce industries are having to grapple with yet another shift—but the future of eCommerce has never looked brighter.

  • Environmental and social responsibility. In every category of eCommerce, there is a growing demand for transparency from brands about carbon footprints and supply chains. Whether it’s plant-based foods or ethically produced organic cotton, customers are paying more attention to where products come from and the impact they have on the world.

  • Less brand loyalty. As customers grow more accustomed to online shopping and become savvier about finding the best deals from brands that share their vision for the world, opportunities abound for new brands to break into the market. Many consumers want to feel a personal or emotional connection with the brands they purchase from, and they are more likely to find that with smaller brands than traditional mega-corporations.

  • Personalized shopping experience. Whatever customers are shopping for online, they want a smooth and easy experience. Many companies are investing in machine learning and AI to develop tailored recommendations and immediate customer service.

  • Social media. Social media has become the channel for many consumers to find products they want, interact with brands and form a personal connection with them, and even make purchases. Social media platforms are no longer simply marketing tools for brands—they are now an integral part of the customer experience.