Report: Online shopping still a-hopping

E-tailers are poised for continued growth in 2004, with the potential to break sales records and sustain positive momentum over the next five years, a report says.

Matt Hines Staff Writer, CNET News.com
Matt Hines
covers business software, with a particular focus on enterprise applications.
Matt Hines
2 min read
It's not springtime yet, but indications are that everything's coming up roses for the e-tail sector.

Online retailers are poised to experience continued growth in 2004 with the potential to break existing sales records and sustain positive momentum over the next five years, according to a report from Jupiter Research released Tuesday.

Jupiter predicts that e-tail sales could swell to $65 billion this year, representing a 24 percent increase over 2003. The study also foresees increasing online retail sales through 2008, with an estimated growth rate of 17 percent per year. Based on that prediction, the e-tail market would total over $117 billion in five years' time.

Despite that growth, the online sector would still represent only about 5 percent of total U.S. retail sales. However, Jupiter concludes that online activity will also continue to increase its influence as a catalyst for offline sales, with almost 30 percent of in-store retail purchases being influenced by Internet-based research by 2008.

The report highlighted several major factors driving the continued growth of online retail sales, including a larger pool of consumers accessing the Web and increased average spending per shopper. Jupiter believes that the number of people buying online will reach a penetration rate of 67 percent over the next five years before slowing, but said the average dollar amount spent by Web shoppers could rise to $780 per year over the same time frame.

Among the industry sectors that New York-based Jupiter predicts will spur the e-tail market's gains are the home and personal care segments, which the firm expects will grow by over 30 percent per year through 2008. This group includes vendors of products such as home improvement merchandise, groceries and over-the-counter drugs. The company said established e-tail industry categories including home computers, books and software would experience annual growth under 10 percent over the coming five years, but indicated that popular categories including apparel and consumer electronics would record steady performance.

The e-tail sector reported banner growth in 2003, with industrywide revenue reaching $93 billion, a 27 percent increase over the year before, according to research firm ComScore Networks. Last year's improvement was spurred by a record fourth-quarter holiday buying season, which accounted for $12.5 billion in sales, a 29.5 percent gain over fourth-quarter 2002.