According to comScore Networks, 2006 online retail spending reached a record $102 billion, a 24% increase over 2005. But will that continue?
That follows first-half 2006 online retail growth, as reported by the US Department of Commerce, that was torrid compared to offline growth.
But after years of double-digit growth, is B2C spending really due for a slowdown?
Not according to 41% of the Internet users surveyed by the investment firm Cowen and Company who said that they are going to increase their e-commerce spending in 2007.
However, Patti Freeman Evans, a JupiterResearch analyst and the author of the "US Online Retail Forecast: 2006-2011" report, warned, "Assuming growth continues in a similar trajectory over the coming decades, US online retail sales will plateau at 10% to 15% of total US retail sales, barring a dramatic change in the online shopping experience that promotes an inordinate spending shift among buyers."
Ms. Evans added, "Online retail sales are maturing and the lion’s share of future growth will primarily come from existing buyers spending more in the online channel."
That certainly sounds ominously like a prelude to slower growth. But the Jupiter forecasts are less than dire.
The Jupiter report calls for US online retail sales to grow by 16% in 2007, reaching $116 billion.
After next year, however, Jupiter predicts that the growth rate of online retail sales will begin to decline, falling to single-digit increases of 9% in 2010 and 8% by 2011.
Over the next five years, Jupiter expects US online retail sales to grow at a compound annual growth rate of 11%, reaching $171 billion in 2011 and accounting for 6.6% of total retail sales.
Jupiter analysts expect Web-influenced offline sales to steadily grow, somewhat offsetting this "slowing" of growth in online buying.
In fact, the firm predicts that by 2011 almost half of all US retail sales will be either influenced by Internet advertising or research — or actually transacted online — and that is good news for online advertising.