Online sales to grow, but more slowly

Annual double-digit gains are expected through 2008, with sales of sporting goods and food and beverages growing fastest, according to a new report.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Online retail sales are expected to post annual double-digit gains through 2008, with sales of sporting goods and food and beverages growing fastest, according to a report released Tuesday.

Retail sales online are expected to increase at a 19 percent annual compounded rate through 2008, resulting in sales of $229.9 billion in the next five years, according to the Forrester Research report. But like most maturing industries, online retail sales will also encounter a slowdown in growth. They are forecast to reach $95.7 billion at the end of this year--roughly a 26 percent increase over last year. In 2002, online sales grew 48 percent over the previous year.

"The slower growth does not reflect a waning of interest from consumers but a natural slowing down of the industry, because you can't sustain those growth levels," said Carrie Johnson, a Forrester senior analyst.

But several bright spots are emerging in the industry.

"Today, online shoppers are doing more than buying books and securing travel plans," Johnson noted.

Forrester predicts online food and beverage retail sales will grow nearly fourfold to $17.4 billion in 2008 from $3.7 billion this year. And sporting goods are expected to increase to $6 billion over the next five years, from $1.7 billion. Johnson noted that nearly a third of the sporting goods sold are expected to be used items.

"The kind of used items we're talking about range from hockey equipment to tennis rackets," Johnson said. "These are really mundane things that children and adults grow out of. Before, the only real place to get rid of them was at garage sales, but now you have places like eBay."

Online sales are expected to account for 10 percent of all retail sales by 2008, a sizable increase from its current slice of 4.5 percent for this year, according to figures from Forrester and a May report by Shop.org, a division of the National Retail Federation. Last year, online retail sales represented 3.6 percent of total retail sales.

A growing base of online shoppers, as well as new online product categories and user-friendly retail Web sites, are contributing to the market share increase in online retail sales, Johnson said.