How Long Can E-Commerce Growth Last?
In 2006, spending online increased by twenty four percent, a sizable margin to be sure. The numbers for online retail keep climbing, but do the signs point to a plateau somewhere in the near future? Or will the growth of online spending continue to skyrocket at this fast pace?
A survey conducted by Cowen and Company shows that 41% of Internet users plan to increase their online spending in the upcoming year.
According to Jupiter Research Analyst Patti Freeman Evans, however, those numbers might be misleading.
In an eMarketer report, Evans suggests that the boom in online retail could be starting to run out of steam.
Evans says, "Assuming growth continues in a similar trajectory over the coming decades, US online retail sales will plateau at 10% to 15% of total US retail sales, barring a dramatic change in the online shopping experience that promotes an inordinate spending shift among buyers."
Evans continues, "Online retail sales are maturing and the lion's share of future growth will primarily come from existing buyers spending more in the online channel."
Even with the less than optimistic long-term outlook, Jupiter still projects that online retail will increase by 16 percent this year, but that's still an eight percent decline from the previous year's sales.
And by 2011, Jupiter prognosticates that online spending growth will have dipped into the single digits.
As the growth reaches a plateau, however, it is expected that online shoppers will end up spending more at online retailers as they become more comfortable with the concept and gain trust in the privacy and security of their personal data during online transactions.
Internet research and advertising will play a key role as well, with Jupiter predicting that by 2011, these factors will play a vital part in the decision making process of nearly half of all U.S. retail sales.
Tags: E-Commerce
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