Online Sales Surpassed $100 Billion in 2003

Online sales surpassed the $100 billion mark in 2003, according to an annual survey conducted by Forrester Research for Washington-based industry association Shop.org. The study also showed that online sales now represent 5.4% of all retail sales.

Among the fastest-growing product categories were online travel sales, which increased 91% over 2002 to $52.4 billion; home and office, which reached $11.1 billion in sales; and computer hardware and software, which hit $11 billion.

According to the report, online retailers on average broke even in 2002. For ’03, they raised operating margins to 21%. Among them, catalogers were the most profitable online sellers with 28% operating margins, up from 22% in ’02. What’s more, 79% of all online retailers were profitable last year, up from 70% in ’02. “Online retailing has arrived as a profit engine with double-digit operating margins,” Elaine Rubin, chairman of Shop.org, which is a division of the National Retail Federation, said in a statement. “Retailers online have found the right balance between selling a product, acquiring and retaining customers, and earning a profit.”

For 2004, the study forecasts online sales to grow 27% to $144 billion. The biggest category gainers are expected to include health and beauty (61%), apparel (42%), and flowers, cards, and gifts (41% each). Online sales are forecast to reach 6.6% of total retail sales this year.

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