1.3. The Future of Online Shopping

Beyond 2004: Steady growth ahead

After discussing the amount of business that has already been conducted on the Internet it would be only worth saying that the future is going to be bright. In this section we will throw some light on what the future holds for online shopping. Again we are trying to portray this picture with the help of numbers.

Fueled by a steady stream of new online shoppers and new product category sales, US eCommerce will grow at a 19% compound annual growth rate (CAGR) over the next five years, from 2003 to 2008. Most significant, online retail will reach nearly $230 billion and account for 10% of total US retail offline sales by 2008, which includes store, Internet, and mail-order sales.

To forecast future online sales, it's estimated the percentage of individual product categories that will move online using a hyper-growth statistical model that calculates how long it will take for each category to reach varying degrees of online penetration. In 1999, it's forecasted that sales would hit $76.3 billion in 2002 and $108 billion in 2003. Actual sales for those years hit $75 billion and $104 billion.

US Online Business-To-Consumer Sales, 2003 to 2008

Approximately five million new US households will shop online each of the next five years, creating a total of 63 million US online shopping households in 2008. Experienced shoppers will continue to diversify their online purchasing, keeping sales on a steady climb: For the next five years, food and beverage, sporting goods, and home products will grow the fastest, outpacing more mature categories like books and travel.

Another factor fueling the growth of online sales is broadband penetration. Competition between Telcos and cable providers is driving the price of broadband services down, making the technology available to the mainstream - 56% of US households will have broadband access by 2008.

US Broadband Penetration, 1998 to 2008