Online Shopping Continues to Click

Retailers continue to benefit from the ever-increasing ease at which the American consumer now shops online. That comfort contributed to a doubling of 2003 online sales and is expected to help produce a 27% jump this year, according to an industry study.

Online retail spending is forecast to reach $144 billion in 2004, or 6.6% of total sales, according to "The State of Retailing Online," a study compiled by Cambridge, Mass.-based Forrester Research for Shop.org, an association for online retailers. Apparel and health and beauty products are expected to be among the fastest-growing categories in 2004.

"Consumers continue to expand their online buying into new product categories as they become more comfortable shopping online," said Carrie Johnson, a senior analyst at Forrester Research. The annual study surveys 150 retailers.

Already, first-quarter online sales have shown improvement over those from a year earlier, helped in part by increased consumer confidence. The Census Bureau reported on May 21 that first-quarter 2004 e-commerce sales in the U.S. rose 28.1% to $15.5 billion, or 1.9% of total sales, which was up from 1.6% of total 2003 sales.

Total retail sales in the first quarter were up 8.8% to $834.8 billion.

In 2003, online retail sales rose 51% to $114 billion, composing 5.4% of all retail sales, the Shop.org survey said, as a result of a 91% jump in online travel sales and strong home and office, hardware and software sales.

By comparison, online sales totaled just $13 billion in 1998.

Two Web-based retail heavyweights, eBay(EBAY Quote) and Amazon.com(AMZN Quote), each had solid results in 2003. eBay posted a 57% increase in 2003 revenue to $684.4 million, while earnings rose to $142.5 million from $87 million in 2002. The company expects full-year 2004 revenue as high as $3.15 billion.

Amazon had a 34% in sales in 2003 to $5.26 billion, while full-year earnings were $35 million, up from a loss of $149 million in the year-earlier period. The company sees 2004 sales increasing to as much as $6.85 billion.

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