E-Commerce Trudges Through Current Slowdown

Like just about everything else related to the Internet, the pace of the growth in the online retailing sector has slowed, but U.S. online retail sales will still reach $104 billion in 2005 and $130 billion by 2006, up from $34 billion in 2001, according to Jupiter Media Metrix.

The original forecast from Jupiter Media Metrix was for $36 billion in 2001 and $118 billion in 2005.

“The doom and gloom over the state of online retailing has been greatly exaggerated,” said Heather Dougherty, Jupiter analyst. “While short-term market factors have slowed the pace and shifted the playing field toward multichannel retailers, the long-term outlook is still positive. Retailers and their constituents must not lose sight of the fact that the online purchasing population continues to grow and their comfort with the channel continues to increase.”

According to Jupiter analysts, 52 percent of the online population will be making retail purchases online by 2002, up from 40 percent in 2000. That figure is expected to grow to 63 percent by 2006.

A March 2001 Jupiter Consumer survey found that most U.S. online buyers are not hesitant to register and give out personal information to retailers: 70 percent register to receive email for new products/special offers; 68 percent register prior to making a purchase; 50 percent register to store personal information on the site; and 41 percent register to receive physical mail.

E-mail marketing seems to have struck a cord with online consumers. Jupiter’s consumer survey found that 85 percent of online buyers say they are very or somewhat more likely to return to a site after receiving an email message from a retailer.

The trend toward offline brands becoming the dominant force in e-commerce also continues. Among the top 50 retail sites ranked by unique visitors by Media Metrix, brick-and-mortar retailers outnumber Internet-only retailers. Of the top retail sites in March 2001, 56 percent were brick-and-mortar retailers, while 44 percent were Internet-only retailers. The reverse was true for March 2000: Internet-only retailers dominated the top 50 retail sites at 62 percent. By September 2000, the number of Internet-only retailers and brick-and-mortar retailers in the top 50 was even.


E-Commerce Spending and Sales Conversion
March 2001
Category Online
Conversion
Rate
Estimated Online
Monthly Revenue

(millions)
Travel Services 18.5% 1,032.4
Clothing/Apparel 23.4% 367.7
Auction 27.8% 335.4
Computer Hardware/Peripherals 13.9% 253.0
Books 26.6% 204.4
Electronics 12.6% 111.1
Computer Software 14.9% 100.9
Music 15.9% 93.0
Health/Beauty 16.9% 82.0
Home and Garden 12.1% 77.1
Flowers, Gifts and Cards 14.0% 65.8
Video 17.6% 40.7
Fitness/Sports Equipment 10.0% 36.7
Toys 13.2% 36.6
Source: Nielsen//NetRatings & Harris Interactive

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