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Monday, January 30, 2006

Online Retailing: The Future’s Bright But Are You Ready?

Posted by @ 7:52 pm

Online sales have been going through a boom period with strong year on year growth and what appears to be endless potential. As with all rosy scenarios, the cynics and speculators were quick to cast doubts on the long term viability of this sales rush. Post holiday period publicity has been forecasting some darker days for online retailing in 2006.

Well, industry analyst and research company, JupiterResearch has released a new report on Online Retailing which paints a significantly brighter picture but also gives some valuable insight on making the most of the maturing online marketplace.

According to the report, online retail sales are predicted to reach $95 billion this year, which constitutes an 18 percent increase from last year. Furthermore it forecasts online sales will grow 12 percent annually and exceed $144 billion by 2010.

These initial forecasts are being driven by the significant growth in new buyers entering the online marketplace and the increased net spending by people online.

When you consider $95 billion in 2006 will only constitute 5% of the $2.1 trillion spent in the U.S. retail market, e-tailing’s long term growth sustainability will be governed by its ability to take retail share away from the offline marketplace.
Based on the growth predictions of the report, it “presents an enormous opportunity for retailers that embrace a well-integrated multi-channel operational strategy.” And that’s the key!

As with any mature market, there will be a plethora of operators all competing for a set group of consumers/shoppers. This will force businesses to get much smarter about their entire retailing process, especially online through stronger up-selling, greater focus on conversion and website usability, and importantly pricing. The increased competition will drive margins down, meaning that procurement and pricing will become a significantly more important consideration for small to medium sized businesses.

So while the prospects are great for the online retailing marketplace, serious online operators need to start consolidating and fine-tuning their retailing practice sooner rather than later. If you rely on the online retail market growth alone for your long term success, you are probably being too complacent!

Rene LeMerle Rene is the marketing manager of - a global search engine marketing company. He also leads the marketing for - a web 2.0 style community for online and digital marketers. Rene has been in the industry since 1997 with much of that time spent helping businesses embrace the best of the internet and digital world.

View Rene LeMerle's profile

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