Online Sales Seen Hitting $329B

CAMBRIDGE, MA-Online retail sales in the US will almost double in the next five years, jumping from a current $172 billion to $329 billion by 2010 as retailers look to new technologies to make the online shopping experience easier and more entertaining, a study by Forrester Research has found.

The increase translates into a 14 % compounded annual sales growth for e-commerce, a hike fueled by a change in attitude about the Web’s potential as a sales tool as businesses reinvest in emerging technologies to enhance the online customer experience, the report said.

“Businesses are debating their online strategy,” Forrester Research vice president Carrie Johnson said in a statement. “Many believe they became too focused on sales. Now they’re looking at their Web sites as a way to drive in-store traffic and increase their engagement with customers.”

Companies that illustrate that new approach include Target, which uses its website to promote and brand its stores, the Gap, which is redesigning its check-out process to make it easier, and Timberland and Nike, footwear manufacturers that are promoting the idea of product customization, Forrester said.

As businesses move toward more innovative online customer experiences, several categories will break through as leaders in the online field.

Travel will continue to remain the top category of e-commerce, with revenue increasing almost 90% from a current $63 billion to $119 billion by 2010, the research firm found.

Health and beauty products, which are expected to show an annual increase of 22%, and small appliances, which should see a 29% sales increase by the end of the decade, are also expected to drive up online commerce, the Forrester report said.

Also expected to show significant growth are apparel, consumer electronics, home and sporting goods and food and beverages. Those categories should achieve growth above the overall 14% compounded annual rate. An increase in the number of online women shoppers should also push 14% of jewelry sales online, the report stated.