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Online retail making breakthrough, says report

In the US it'll be worth $108 billion by 2003. Why is it always 2003 these days anyway?

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Forrester Research says that online retail sales are moving into an upward spiral that will take them to $108 billion in the US by 2003, when 40 million US households will be shopping online. The prediction is based on improving consumer acceptance of online shopping and on this year's data, which suggests that breakthrough point is finally arriving. By the end of this year Forrester says almost 9 million US households will have shopped online for travel services and retail goods other than vehicles, spending $7.8 billion. As consumers get over worries about security and privacy (Forrester may be discounting the probability of massively embarrassing and highly publicised screw-ups here) retailers will need to start addressing the growing pool of consumers. "On-line retailing has left the experimental phase and is accelerating into the mainstream," says James McQuivey, analyst in Forrester's On-line Retail Strategies service. "Merchants are reporting dramatic growth in both sales and site traffic over the past 12 months. This pattern will become a self-perpetuating cycle -- as more consumers come on-line to shop, retailers will compete more aggressively for sales, in turn drawing still more consumers and merchants to the Web." Forrester splits online retail into three broad categories, and predicts the numbers for 2003 as follows. Convenience items such as books, music, clothes and flowers, and they'll be worth $32 billion. Researched purchases (airline tickets, computers etc) will be $56 billion, with travel alone achieving $30 billion. Replenishment goods such as groceries and "personal care" (is this big in the US? What is it?) will be slower in taking off, "hampered by the lack of a feasible distribution model," so it'll only account for $19 billion. We're not sure we can figure that last one out. You order the goods, somebody up at the store puts them in a van, then brings them round. Why isn't this a distribution model? And The Register is pretty sure that we'll have spent over $19 billion on Tesco Internet shopping on our own by 2003. Mind you, that includes beer and cigarettes. ®

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