Report: U.S. E-Commerce Still Surging

Despite the gloom and doom of the ongoing dot-com shakeout, a new report from eMarketer predicts that U.S. online retail sales will grow from a projected $37 billion (US$) in 2000 to $125.6 billion over the next four years.

In addition, e-commerce revenues in 2000 are expected to almost double from the $19.4 billion recorded in 1999. According to the report, future growth will primarily be fueled by a change in consumer habits from “just browsing” to actually buying online.

“Online buying is an evolution,” Geoff Ramsey, the author of the report, told the E-Commerce Times. “We’re approaching one level of saturation in Internet users. The [increase in online buying] will come from those who are already online but haven’t purchased before, or those who’ve made one or two purchases and will purchase more frequently.”

Gender Shift

This year, 64 million individual Internet users will participate in some form of online shopping-related activity, and 24 million households will have purchased at least one item on the Web. Notably, though today’s gender breakdown of Internet users is almost 50/50, Ramsey believes that women will soon be making the lion’s share of online purchases.

“If we see the same trend as in offline retail, over the next few years women will start to manage 60 to 70 percent [of online purchases],” Ramsey said.

According to the report, total worldwide e-commerce will have grown at a compound annual rate of 93 percent between 1999 and 2003. E-commerce growth in the U.S. will rise at a slightly less frantic annual pace of 85 percent.

Although the U.S. currently dominates the global e-commerce market, with three-quarters of the world’s total revenues in 1999, this number will drop to around 60 percent as growth in non-U.S. markets begins to catch up.

Planning for the Future

The biggest challenge to the future of e-business will be fulfillment of goods and services, as consumers become increasingly frustrated over out-of-stock merchandise, high shipping costs and late deliveries of products ordered on the Web.

“Those businesses that focus on operational excellence and pleasing customers will succeed,” Ramsey said. “The smarter ones will utilize current infrastructures, such as courier services. Every business model that’s tried to do logistics themselves — the financials are horrendous.”

Ramsey also said that most analysts look at the recent dot-com failures as a positive sign, part of the necessary stage of separating the e-business wheat from the chaff.

“Nobody knows exactly what the e-commerce landscape will look like, except it will be built upon the ruins of the first pioneers,” Ramsey said. “E-commerce will go on regardless of those who fail. We’ll learn from those lessons, and other companies will pick up the baton and move forward.”