Web Sales Will Grow Despite Dot-Com Shakeout

July 18, 2000

Online retail sales are expected to reach $152 billion by 2002, Reuters news service reports. And, while only a few of today’s online retailers may survive the ongoing industry shakeout, a recent report found that those that do survive will keep a strong hold on overall consumer spending.

Business-to-consumer sales over the Internet will grow from an estimated $25 billion in 1999 to $152 billion in 2002 and to $233 billion by 2004, according to a report released on Tuesday by Internet research firm Giga Information Group Inc. Still, consumer online sales will only make about 3 percent of total consumer spending by 2004, the report said.

The report estimates that, by 2002, more than 60 percent of the projected $150 billion spent on the Internet will be made through “clicks-and-mortar” merchants, while only 26 percent will be made via Internet-only retailers. “Bricks-and-mortar” retailers that developed online stores made up about 33 percent of consumer sales in 1999. And it is these “multichannel” retailers that will dominate online sales by 2002, Giga said, growing their market share of spending to two-thirds of the market by 2002, or about $92 billion.

In addition, Giga said the mix of business-to-consumer sales via the Internet is likely to change over the next three years. In 1999, more than 75 percent of so-called “B2C” sales were in just five industries: computers and computer equipment, travel, brokerage, auction, and books and music. By 2002, Giga predicts expects these five industries will account for about half of consumer spending online.

New categories, such as auto sales, groceries, toys, gifts, insurance, real estate and government, will begin to stand out more, and by 2004, Giga predicts online sales of autos and groceries will exceed those for online travel and computer sales.

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