Sunday, February 08, 2009

US E-Commerce expected to climb back to last year's levels by 2010

E-commerce in the United States is expected to climb back to last year's levels by 2010 after experiencing slowing growth in 2009 due to the recession, a research group said on Monday.

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Online sales in 2010 could reach approximately $176.9 billion, representing 13 percent growth, said Forrester Research in its five-year e-commerce forecast.

Last week, the group released data saying the online retail channel was expected to grow 11 percent to $156 billion in 2009, below the 13 percent growth seen in 2008, and the 15 percent growth it had earlier predicted for 2009.

"While there is the possibility of a bearish scenario in which no recovery surfaces in 2009, consumers appear to be enthused about a new president, and government plans to stimulate the economy," the report said. "Furthermore, few recessions have lasted longer than a year in total."

The deteriorating U.S. economy led to tepid online sales in 2008 as consumers cut back on all but the most necessary of purchases. flights link

Online retailers faced severe competition from brick-and-mortar establishments that were heavily discounting merchandise, while giants from Inc to eBay Inc have acknowledged the challenging macroeconomic environment that has spooked not only consumers, but financial markets around the globe.

In 2009, greater numbers of affluent customers shifting their purchases from traditional retailers to online outlets will outweigh decreases seen from other customers stemming their spending overall, the report found.

But after an acceleration in 2010, Forrester predicts that growth will slow, with 10 percent, 9 percent, and 8 percent growth expected for 2011, 2012 and 2013, respectively.

"It's just the maturity of the market -- it's reaching its maximum size," Sucharita Mulpuru, author of the report, told Reuters. "Even a few years ago we would have suggested it would be single-digit growth then."

At the same time, e-commerce will pick up a greater piece of overall U.S. retail sales.

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"Despite the deceleration in growth, Web sales are nonetheless expected to be positive as e-commerce continues to capture market share from brick-and-mortar stores," the report found, citing Web shopping's convenience and the ability for consumers to search for low prices.

Whereas the online channel will make up 6 percent of total retail sales in 2009 and 2010, that will increase to 7 percent and 8 percent in 2011 and 2012, respectively.

Online sales in 2013 are similarly expected to make up 8 percent of overall sales. (Reporting by Alexandria Sage)

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