Over the past decade, numerous industries have exploded onto the US economic landscape. Propelled by technology and regulatory changes, these industries have the potential to transform the economy. At the very least, they are bound to be increasingly important drivers of economic growth in the years to come. Below is a short list of rapidly growing industries from IBISWorld’s specialized collection.
Peer-to-Peer Lending Platforms
The Peer-to-Peer Lending Platforms industry has grown in both popularity and size. The industry provides lending directly between individuals and organizations, cutting out bank intermediaries, to pool their money and support the efforts of borrowers. With traditional banking services under heavy scrutiny following the subprime mortgage crisis, peer-to-peer lenders have re-established a sense of trust between borrowers and lenders. Although the industry is in a relatively infantile stage compared with traditional banking, technological innovation and a confounded effort to directly appeal to consumers with lower interest rates, easier access and greater flexibility have established industry participants as legitimate contenders in the finance and banking sector. As a result, industry revenue is expected to have increased at an annualized rate of 156.8% to total $1.2 billion in the five years to 2015.
By cutting out bank intermediaries and linking lenders directly to borrowers, industry participants effectively reduce overhead costs associated with intermediaries. Furthermore, industry participants vaunt highly developed and innovative algorithms to perform data processing, calculation, and automated reasoning functionalities. Accordingly, such capabilities have allowed industry operators to offer lower interest rates to borrowers seeking a better deal on their debt.
In the five years to 2020, industry revenue is anticipated to continue growing, increasing at an annualized rate of 38.9% to $6.1 billion. Paramount to the industry’s ability to compete against the established banking sector is its ability to innovate, maintain and further develop in-house technology, as this is the turnkey trait in delivering lower interest rates to borrowers. In addition, user experience and consumer testimonials will help industry operators gain traction with prospective borrowers and boost product and service demand. However, with regulators playing catch up with this fairly new industry, regulatory uncertainty will hang over peer-to-peer lenders over the next five years.
3D Printer Manufacturing
The 3D Printer Manufacturing industry is booming as a result of technological advancement. Industry operators produce devices that enable industrial buyers and consumers to use additive manufacturing. Additive manufacturing involves creating intricate three-dimensional (3D) shapes by laying down successive layers of materials. This is in contrast to traditional subtractive manufacturing, which removes volume from an original block of material to create a final product. As a result, 3D printers allow for more rapid and efficient production of goods. Over the past five years, the use of 3D printers has increased sharply, helping industry revenue nearly triple to $1.5 billion in the five years to 2015. However, presently, the use of 3D printing is relatively limited, with most use coming from medical device manufacturing, architectural design, engineering, construction and aerospace.
Over the next five years, industry revenue is forecast to grow at an annualized rate of 19.7% to $3.7 billion. Most of this growth will come from technological changes that will increase the application of 3D printing, while reducing adaptation costs via lower printer prices. For instance, the aerospace and medical device manufacturing industries are expected to greatly increase the use of 3D printers, as printers are able to use more complex materials such as various metals and even tissue cells. Moreover, these industries often produce complex components that are expensive and inefficient to manufacture through traditional methods.
Industry participation is also expected to increase over the next five years, as new operators attempt to expand their presence during this period of technological advancement. Over the five years to 2020, the number of industry enterprises and employment are projected to grow at annualized rates of 10.6% and 16.4%, respectively.
Medical and Recreational Marijuana Stores
The outlook for the Medical and Recreational Marijuana Stores industry is looking greener each day. Riding a wave of legalization, industry revenue is estimated to have grown at an annualized rate of 34.2% to total $3.6 billion over the five years to 2015.
There has been no shortage of demand in recent years, as the industry has benefited from the increased acceptance and legitimacy of medical marijuana products. To date, 23 states and Washington, DC have legalized the sale of medical marijuana, leading to a boom in pot shops across the country, to total an estimated 5,717 establishments in 2015.
Meanwhile, the legalization of recreational marijuana sales in Colorado and Washington led to a surge in industry revenue in 2014, with revenue rising 70.5%. Still, industry-wide margins remain artificially low because the vast majority of the industry is legally required to operate on a nonprofit basis. With for-profit marijuana sales rising as a share of all marijuana sales, industry profit margins reached an estimated high of 3.7% in 2015.
Still, the legal sale of recreational cannabis accounts for just 14.1% of industry revenue, with medical marijuana sales comprising the lion’s share of revenue at 85.9%. However, the immediate future is expected to exhibit a series of new legalization laws across the United States, resulting in unprecedented growth. Highlighting the legalization movement, California, which is already the industry’s largest market with nearly 70.0% of all industry establishments, is likely to legalize for-profit recreational marijuana. Currently, the California market is limited to nonprofit medical marijuana establishments. Should for-profit initiatives enter the books after the upcoming election, prospects for the Medical and Recreational Marijuana Stores industry will be more positive than ever. In the five years to 2020, industry revenue skyrocketed at an estimated annualized rate of 30.3% to nearly $13.4 billion.
Crowdsourcing Service Providers
By providing access to temporary employees through an online network, the Crowdsourcing Service Providers industry is revolutionizing the way some companies deal with workforce expansion. Industry consumers crowdsource project-by-project labor when it is too costly to employ full-time or part-time workers. Industry operators charge fees to downstream businesses that use their platforms, charging clients a portion of the wages that they pay to workers. The relative youth of this industry, which emerged in the early 2000s, has led to explosive growth in recent years. This growth is expected to continue over the five years to 2020.
During the period, the industry is expected to experience double-digit revenue growth, ultimately increasing at an annualized rate of 20.2% to $2.2 billion in 2020. There is inherent difficulty for businesses in workforce expansion, but that is expected to intensify moving forward, especially as scrutiny over workers’ benefits and corporate taxation increase. More businesses are likely to embrace this industry as a cost-effective solution to the need for increased labor. As market acceptance grows, the industry is expected to continue its rapid expansion. Industry establishments are expected to grow at an annualized rate of 13.1% to 1,474 to meet explosive demand growth, servicing existing service segments and expanding into new territories. However, saturation may mitigate potential growth during the period. The crowdsourcing translation segment of the industry was in its infancy in the mid-2000s and it is already showing signs of saturation. As a multitude of companies entered the market and demand for services slowed, saturation may become more pervasive moving forward. Nevertheless, the industry will likely continue its strong growth.
Biometrics Scan Software
As the threat of identity theft continues to grow, consumers are looking toward technology for security. As a result, over the five years to 2020, the Biometrics Scan Software industry is projected to experience high demand. Biometric scan software uses a person’s fingerprint, iris, retina or other facial features for identification. Because this software is so secure, businesses are frequently finding new uses for it. For example, biometric software developers are currently working on a way to link medical records to fingerprint readers in order to ensure correct data is being used and to stop hackers from stealing patient information. In addition, the financial industry has begun incorporating biometric scanners to secure payment transactions and eliminate the use of passwords. Because passwords can be easily stolen or hacked, biometric scanners are also frequently being used in consumer electronics as a more secure substitute for passwords. During the five years to 2020, industry revenue is anticipated to rise at an annualized rate of 14.0% to $9.4 billion. As the industry expands to meet growing demand for security software, operators are anticipated to begin rapidly entering the industry. The number of biometric scan software companies is projected to increase at an annualized rate of 5.8% to 158 in the five years to 2020. Though the number of companies is relatively small, employment is projected to rise at an annualized rate of 10.6% to total 14,395 employees over the period. This employment growth is particularly significant because the average wage in the industry is expected to reach $158,467 in 2020.