Wednesday, March 12, 2008

Upsales To Drive Retail E-Commerce

MARCH 12, 2008

The supply of online buying newbies is not infinite.

Since 2000, the USC Annenberg School Center for the Digital Future has tracked the percentage of Internet users who have purchased something online.

USC's researchers said that in the early days of the project, consumers worried about trusting unknown merchants, damage during delivery, buying without a live human being in the process and privacy and security.

Tracking those same fears, USC found that in 2007 almost all of them except for privacy and security had largely disappeared—and buying without a human became an asset rather than a liability.

Addressing consumer concerns was at least partly responsible for the steady rise in online buyer numbers since 2003, after the dotcom bubble burst.

eMarketer projected in November 2007 that the percentage of Internet users who have made an online purchase will continue to rise steadily but slowly, at least through 2011.

"Most analysts including eMarketer say that online sales growth has more to do with incumbent online buyers increasing their e-commerce spending rather than increasing new online buyers," said Jeffrey Grau, senior analyst at eMarketer.

"The market is maturing and most people who plan to purchase online are already doing so," he said.

The boom in online buyers has certainly been good for retail e-commerce. While retail industry sales growth has ranged from 2.2% to 6.4% during the past seven years, retail e-commerce growth as been as high as 32.6% (in 2002), according to eMarketer calculations of US Department of Commerce (DoC) data.

Retail e-commerce sales data from the DoC tracks the ascent of online buying. Since the US DoC began publishing annual e-commerce sales estimates in 2000, growth in online sales has far outpaced retail industry sales—the vast majority of which comes from stores.

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