E-Commerce: Harrison Ford or Kevin Costner?

Nov 17, 2005 2:13 AM  By

That isn’t a trick question. It’s what Forrester Research Inc. wonders will happen to e-commerce in the next five years—will it age gracefully, like Ford, or will it have its 15 minutes in the sun and slide into B-movie oblivion, a la Costner?

Given the wonderful sales that online retailers enjoyed in the last holiday season, they really won’t have to fear that they’ll go the Costner route, writes Forrester analyst Carrie Johnson in her new report, “U.S. E-Commerce: 2005 to 2010.” For the first time, sales of general merchandise will top $100 billion in 2005, and excluding travel, online sales are estimated to rise from nearly $110 billion this year to $210 billion in 2010. In five years, e-commerce will account for 13% of total retail sales.

Other factors propelling Internet commerce into attractive seniority are loyal consumers and an online business environment that spurs innovation. With their higher disposable income ($68,000 vs. $52,000 for all consumers), Web shoppers keep online sales strong even in categories considered discretionary, like apparel, cosmetics, and flowers. Online shoppers have also incorporated the Web into their daily shopping routines, according to the Forrester report: 42% have e-mailed a customer service inquiry, 33% have tracked a package, 28% have searched for free offers and coupons, and 22% visit comparison-shopping engines. In addition, the convenience of Web shopping is an unbeatable factor in its favor.

The sheer number of Web stores has led to changes in technology and service that will keep customers coming back. Initiatives include one-click shopping, customer reviews, building products online, custom programs, auctions, and connecting online experiences to offline shopping events. “Multichannel retailers do their share to introduce and hype online shopping to consumers,” writes Johnson. “As store networking costs fall and retailers look for innovative ways to differentiate their store experiences, this trend will accelerate during the next five years, introducing e-commerce and technology to the masses.”

For more information, visit http://www.forrester.com.