Total Online Sales Expected To Hit USD 259 Billion In 2007
As the Internet grows up, computers have moved over to make room for clothing at the top of the sales list. According to the first part of The State of Retailing Online 2007, the tenth annual Shop.org study conducted by Forrester Research, Inc. (Nasdaq: FORR) of 170 retailers, Americans last year spent more online on clothing than they did on computers for the first time in history. The report found the apparel, accessories, and footwear category reached USD 18.3 billion in 2006 and is expected to hit USD 22.1 billion in 2007. This year, 10 percent of all clothing sales are expected to occur online.
“Apparel retailers have overcome a number of hurdles to encourage shoppers to buy clothing and accessories online,” said Scott Silverman, executive director of Shop.org. “Retailers are doing such a great job online that in some cases it’s easier to find and buy clothing on the Web than it is in a store.”
The report suggests that the apparel and accessories category has experienced strong sales because of an influx of new companies and liberal shipping policies such as free shipping on returns and exchanges. Additionally, apparel and accessories retailers are integrating new technologies onto their sites including rich imaging, where customers can zoom and rotate merchandise or see the item in different colors before buying, all of which eases the mind of a customer who is hesitant to purchase apparel online.
Computer hardware and software, long the frontrunner for nontravel online sales, moved into second place in 2006 at USD 17.2 billion, followed by sales of autos and auto parts (USD 16.7 billion) and home furnishings (USD 10 billion).
Online Sales to Soar Again This Year
According to the report, 2007 online sales (including travel) are expected to rise 18 percent to USD 259.1 billion. Sales excluding travel will reach USD 174.5 billion. This strong growth will come off of an impressive performance in 2006. Online sales last year rose 25 percent to USD 219.9 billion. Excluding travel, online retail sales rose 29 percent to USD 146.5 billion, representing six percent of total retail sales in 2006.*
“As consumers flood the Web to purchase merchandise and research products, online retail is moving full-speed ahead,” said Sucharita Mulpuru, Forrester Research senior analyst and lead author of the report. “This strong growth is an indicator that online retail is years away from reaching a point of saturation.”
Another sign that eCommerce has come of age is that profitability throughout the sector has stabilized. Eighty-three percent of respondents to the survey reported profitability and 78 percent said they were more profitable than 2005. Profit as a percentage of revenue did not change, the report notes, because revenue and expenses grew as well.
The second part of the study, which will examine tactics that online retailers found most successful and site features that resonated most with online consumers, will be released in September at Shop.org’s Annual Summit.
