Online Sales to Surpass $200 Billion This Year, According to Shop.org/Forrester Study

May 23, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on May 2006 After speeding past the $100-billion mark just three years ago, online sales will likely top $200 billion this year.

That’s according to the 2006 State of Retailing Online, the ninth annual Shop.org study conducted by Forrester Research of 174 retailers. The survey reports that 2006 online sales (including travel) are expected to rise 20 percent to $211.4 billion. Sales excluding travel will reach $138 billion.

The largest non-travel categories this year will include computer hardware and software ($16.8 billion), autos and auto parts ($15.9 billion), and apparel, accessories, and footwear ($13.8 billion). Pet supplies and cosmetics and fragrances are expected to experience growth rates over 30 percent, more than any other categories.

According to the report, online sales last year rose 25 percent to $176.4 billion. Excluding travel, online retail sales rose 28 percent to $113.6 billion, representing 4.7 percent of total retail sales in 2005. The survey takes into account home furnishings sales, in addition to computers, automobiles, apparel, consumer electronics and other smaller ticket items.

Recognizing the importance of online shopping, retailers are investing in Web sites to capture those customers who preshop, according to the survey.

As customers increasingly use the Internet to compare prices, find gift ideas, and research products, retailers are relying on Web sites to increase sales in their stores. To create a true multichannel environment, retailers are employing a variety of different strategies. More than two-thirds of retailers have consistent pricing across channels and almost half—46 percent—allow their customers to buy and redeem gift cards online and in stores.

“By encouraging different channels to work together, instead of in isolation, everybody wins,” said Scott Silverman, executive director of Shop.org. “Retailers have been focusing on integrating their Web sites and stores to better serve their customers, which is paying off for companies in the form of higher sales.”

Retailers recognize the importance the online channel plays in overall sales. In fact, retailers reported that 22 percent of offline sales are influenced by the Web. Web sites can also give retailers an opportunity to reach out to an entire new customer base, as 38 percent of online customers are new to a company’s entire business.

Shop.org is the association for retailers online. Founded in 1996, Shop.org became a division of the National Retail Federation in 2001. The association’s membership includes interactive executives from store-based retailers, catalog-based retailers, Web-based retailers, and retail solution providers.