Online Retail Growth Is Slowing

Economic woes online, too?

Although consumers are reacting to the economic downturn by spending less, this will create more of a hardship for retail stores than for online retail outlets.

“Store sales will be hit harder than Internet sales because affluent shoppers, who form the core of online buyers, tend to ride out economic downturns better than lower- and middle-income consumers,” says Jeff Grau, eMarketer senior analyst and author of the new report, US Retail E-Commerce: Slower But Still Steady Growth.

eMarketer estimates that US retail e-commerce sales (excluding travel) will reach USD 146 billion in 2008, up 14.3% over 2007.

“Still,” warns Mr. Grau, “over the next few years online sales growth rates will steadily decline.”

There is little reason for panic, however.

“A drop in the number of new online buyers is an inevitable sign of the maturation of the online retail channel,” says Mr. Grau.

Economic woes online, too?

Although consumers are reacting to the economic downturn by spending less, this will create more of a hardship for retail stores than for online retail outlets.

“Store sales will be hit harder than Internet sales because affluent shoppers, who form the core of online buyers, tend to ride out economic downturns better than lower- and middle-income consumers,” says Jeff Grau, eMarketer senior analyst and author of the new report, US Retail E-Commerce: Slower But Still Steady Growth.

eMarketer estimates that US retail e-commerce sales (excluding travel) will reach USD 146 billion in 2008, up 14.3% over 2007.

“Still,” warns Mr. Grau, “over the next few years online sales growth rates will steadily decline.”

There is little reason for panic, however.

“A drop in the number of new online buyers is an inevitable sign of the maturation of the online retail channel,” says Mr. Grau.

In fact, Mr. Grau sees several reasons to be optimistic about the future of Internet retailing.

“Retail e-commerce could get a boost from underserved consumer segments such as seniors and Hispanic-Americans,” he says.

To take seniors as an example, by 2011 there will be 25.4 million Internet users in the US ages 62 and older. That represents a 7.6% average annual growth rate—more than twice the 3.1% growth rate eMarketer forecasts for the entire US Internet population.

Seniors today enjoy better health, longer and more active lives, greater free time and higher discretionary income than past generations.

“However, as people age they often begin to experience problems with their vision, hearing, cognitive functions and mobility,” says Mr. Grau. “Web retailers should take these factors into consideration.”

To better understand the many changing dynamics of online sales, download the new eMarketer report, US Retail E-Commerce: Slower But Still Steady Growth, today.

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