Consumers continue to expand their
Retailers continue to benefit from the
ever-increasing ease at which the American consumer now shops online.
That comfort contributed to a doubling of 2003 online sales and is
expected to help produce a 27% jump this year, according to an industry
Online retail spending is forecast to
reach $144 billion in 2004, or 6.6% of total sales, according to "The
State of Retailing Online," a study compiled by Cambridge, Mass.-based
Forrester Research for Shop.org, an association for online retailers.
Apparel and health and beauty products are expected to be among the
fastest-growing categories in 2004.
"Consumers continue to expand their online
buying into new product categories as they become more comfortable
shopping online," said Carrie Johnson, a senior analyst at Forrester
Research. The annual study surveys 150 retailers.
Already, first-quarter online sales have
shown improvement over those from a year earlier, helped in part by
increased consumer confidence. The Census Bureau reported on May 21 that
first-quarter 2004 e-commerce sales in the U.S. rose 28.1% to $15.5
billion, or 1.9% of total sales, which was up from 1.6% of total 2003
Total retail sales in the first quarter
were up 8.8% to $834.8 billion.
In 2003, online retail sales rose 51% to
$114 billion, composing 5.4% of all retail sales, the Shop.org survey
said, as a result of a 91% jump in online travel sales and strong home
and office, hardware and software sales.
By comparison, online sales totaled just
$13 billion in 1998.
"Online retailing has experienced its
own version of survival of the fittest, in which those online retailers
that couldn't control costs while attracting online consumers shuttered
their doors," the study said, citing the fact that two-thirds of
Web-based retailers reached profitability in 2003.
Retailers also are realizing important synergies between their online
business and in-store business. In 2003, 24% of retailers said in-store
sales were influenced by customers' ability to view items online. That's
up from 15% in 2002. In addition, 87% of retailers accepted returns or
exchanges in stores of items purchased online, the study also said.
"Retailers online have found the right balance between selling a
product, acquiring and retaining customers, and earning a profit," said
Chairman Elaine Rubin of Shop.org.
Specialty retailers with the bulk of business coming from in-store sales
are also benefiting from the overall increase in online sales. Upscale
gadget company Sharper Image (SHRP:Nasdaq - news - research) had a 58%
spike in Internet sales in the first-quarter 2004, to $26.2 million.
Overall sales rose 34% to $156.4 million, while net earnings increased
to $2.1 million, from $700,000 in the year-earlier period.
In all of 2003, Internet sales increased 37% to $95.1 million at Sharper
Image, while total sales increased 29% to $379.3 million.
Meanwhile, Internet sales at apparel retailer Urban Outfitters (URBN:Nasdaq
- news - research) have also boosted quarterly sales. In the latest
first quarter, the company had a 95% in direct-to-consumer sales, which
include Internet and catalogue sales, to $18.6 million. Net sales in the
quarter increased 59% to $170.3 million.
In 2003, the company said total sales rose to $422.8 million, of which
direct-to-consumer sales were $31.8 million, or 7% of total sales. That
compared with total sales of $349 million in 2002.