The Top 11 Fastest-Growing Industries
Most businesses and services are still slowly recovering from the trauma of the Great Recession. These 11 categories, however, are already in blue-sky territory.
Recovery mode is slow but sure. Annualized growth of 3.3% is forecasted over the next five years thanks, in large part, to industries fathered by the Web. In fact, more than doubling the pace of the GDP is the increase of US mobile Internet connections that have enjoyed and will continue to see an estimated annual rise of 7.9% in the 10-year period between 2008 and 2018.
IBISWorld has identified 10 standout industries that are outpacing the rest of the economy by feeding off surging Internet traffic and a robust mobile device market.
The year was 1999. Eminem took hip-hop by storm with his major-label debut, The Slim Shady LP. President Clinton was tried by the Senate for impeachment. The Y2K bug was threatening to upend modern society. And Monster.com (NYSE:MWW) launched with more than 1 million resumes.
This website debut ushered in a new era of job searching and recruiting that would replace newspaper ads, paper resumes, and the USPS by tapping the promise of the new-fangled World Wide Web and electronic mail. A decade and a half later finds the entire civilized world comfortably settled into an online existence -- looking for work on the (cooler-sounding) Web or Net and shooting emails to prospective employers. Internet recruitment has ripened into a stand-alone industry that reaches hundreds of millions of visitors on websites each month and will take in $1.7 billion this year.
Economic downturn and all, properties like CareerBuilder, LinkedIn (NYSE:LNKD), and Indeed have grown an annualized 11.9% since 2003 and can look forward to that rate of growth over the next five years by focusing on specialized niche job markets and job seekers.
Before the Internet, fantasy sports was an uncharted and unglamorous, paper-and-pencil and snail-mail entity -- many leaps and bounds from the highly profitable enterprise that is now counted among the fastest growing industries in the world.
Today, drafting and managing fantasy teams of real-life professional ball players is big business, $1.2 billion to be exact. Fantasy sports service firms develop software and online platforms that have taken the activity from tight-knit social circles to literally any sports fan in the universe with an Internet connection. Since 2003, the industry has reaped an “explosive” 240% rate of growth and, as content continues to accommodate mobile devices, the forecasted 13.1% rise through 2018 should stay right on track.
With a far wider selection available on websites that offer crisp, zoomable color photos, slipping away is the consumer’s need to actually sit in a chair before buying it. Sure, shoppers still visit the Ashley Furniture store, IKEA, and Pottery Barn (NYSE:WSM), but the new wave of home goods and decor is happening exclusively online and also in the emerging market of curated flash sales sites such as Joss & Main, which promise below-retail pricing and have mobile apps built into their business models. This year, online furniture revenue will climb to over $7.5 billion and the industry will have experienced annualized growth of 13.8% between 2008 and 2018.
Threatening to put the Al Bundys of the world on the unemployment rolls is the virtual shoe market. This industry saw $8.9 billion in 2013 sales and will expand every year by 17% until 2018. Akin to the growing trend of website furniture purchases, shoe shoppers’ confidence has grown enough in the industry to click the “buy” button despite being, perhaps, thousands of miles away from the actual product. And when sites like Zappos let customers try on as many pairs as they want with free shipping and returns on all orders, little incentive is left to leave the house.
E-Cards and Online Photo Printing
The paper greeting card is getting picked over at the drugstore. Ironically, people are more and more turning to digital cards and online purchases to celebrate their Hallmark holidays. The proliferation of the Internet and social media -- and Facebook’s (NASDAQ:FB) gift program ramp-up -- combined with convenience and affordability factors have swelled industry revenue by 36% since 2008. The next five years promise another 40% bump.
The online photo industry has likewise benefited from increased Internet access as well as ongoing advances in printing technology and will pick up nearly 28% more business annually until 2018.
Online Payment Processing
An obvious beneficiary of the e-commerce boom are developers of online payment processing software that make electronic financial transactions possible. No single firm has emerged as a heavy hitter in this fragmented market, though the largest player, PayPal (NASDAQ:EBAY), claimed 24.2% of the industry’s total bottom line in 2012. This makes an interesting open season of the next five years of market growth; in that time, the industry is expected to see a 17.2% increase in revenue per year.
Online Fashion Sample Sales
Capitalizing on the sinking ship that was the US economy in the mid-2000s, apparel flash sale sites began cropping up on the Web as the discount shopper’s online sanctum. But even as the recession abated, Americans have continued to keep up the bargain hunt -- to the tune of $2.5 billion in 2013 -- on sites like HauteLook (NYSE:JWN) and Gilt. In fact, our savvier shopping habits turned Ideeli into the country’s fastest growing company in 2011.
And there’s 55.6% more annual growth to be had within the industry until 2018.
Social Networking Sites
Investors who blazed the trail in the social media sector by snapping up shares of Facebook on the first day of trading are now being rewarded for their pioneer spirit. The long wait to see the stock rise above $45 is over.
In the black and on the climb, Facebook seems to have sorted out its once-iffy mobile strategy. The company’s second-quarter earnings report -- touted by experts as a huge turning point -- showed 800 million users accessing the social network on a smartphone or tablet, and mobile ad sales accounting for 41% of total ad revenue.
Meanwhile, Twitter’s (NYSE:TWTR) IPO created 1,600 new millionaires -- though, mostly, of its workforce.
Over the past decade, social networking sites recorded 74.4% annualized growth with 2103’s revenue nearing $6.6 billion. The next five years will find the industry gaining another 25% through 2018 as it continues to test and prove monetization schemes. And though Facebook and Twitter currently dominate the social networking space, the wealth is spreading to a number of publicly traded companies like LinkedIn, Mediabistro (NASDAQ:MBIS), Renren Inc. (NYSE:RENN), Sina (NASDAQ:SINA), MeetMe (NYSEMKT:MEET), and Vringo (NASDAQ:VRNG).
The term “out of print” is beginning to take on new meaning. Though a bit hyperbolic, it’s been said that a couple of generations from now, people won’t know what a book is.
The $6.8 billion e-book market certainly seems to speak to a paperless future. Many book publishers are now catering exclusively to the on-the-go reader by producing digital-only versions of some titles. The recent merger of publishing powerhouses Penguin and Random House will likely propel the company to the top of the e-book industry and let it reap a large share of the 88.3% revenue growth, annualized between 2008 and 2018.
Social Network Game Development
The big winner, and by a long shot, among the growth industries of the near-future is the one that has us furiously drawing pictures of guess words and matching colored candies inside four-inch screens. Though this sector had barely emerged from the womb 10 years ago, companies that create casual-social games and apps for mobile devices are expected to make $6 billion in 2013, and are projected to grow by a 134.4% annual margin through the next five years.
When founded in 1982, Electronic Arts (NASDAQ:EA) was at the forefront of home-computer console gaming and has survived by evolving with technological advances. The company has remained relevant with moves like its 2010 acquisition of Angry Birds publisher Chillingo for $20 million in cash and the launch of Hasbro’s (NASDAQ:HAS) classic Battleship game as an app.
Zynga (NASDAQ:ZNGA), on the other hand, was born a generation later to a player base of Facebook users and owes the rapid success of Farmville -- which peaked at 82 million players a month -- to its relationship with the social network.Though the stock has been in trouble since its public debut, Zynga still lays claim to some of the most widely played games in the world.
Also see: The Top 10 Most At-Risk Industries
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