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Study: Online Retail to Reach $184 Billion by 2004

A new industry study forecasts that online retail sales in the United States for 1999 will reach $20.2 billion, and hit $184 billion by 2004.

And, consumer adoption of e-commerce will continue to accelerate as 7 million Internet users make their first online purchases this year, says the report from Forrester Research Inc.

More than 17 million households will be shopping online by year-end, says the report, which goes on to predicts that a new type of retailer -- the post-Web retailer -- will emerge to serve the 49 million households shopping online by 2004.

As e-commerce matures, Forrester said it expects merchants to aggressively exploit the virtual shelf space and personalized shopper data made available by the Internet. Post-Web retailers will use detailed knowledge about a target customer segment to sell relevant products and services.

"Post-Web retailers will need to do more than just sell everything to anyone," said Seema Williams, consumer e-commerce analyst at Forrester.

"To succeed, they must anticipate customer demand, expand their product and service offerings into adjacent categories, and simultaneously sell through multiple retail channels, including stores, catalogs, call centers, Web sites, interactive TV, and mobile devices. None of today's merchants are prepared for post-Web retail."

Merchants must centralize the available information about shoppers -- purchase history, direct mail responses, and Web store click-stream data -- to identify their most profitable customer segments, Forrester said.

This information can be used to identify and adopt new product categories that will appeal to these customers. And by codifying merchandising rules, retailers can move beyond personalization into anticipatory selling.

"Consolidation will reshape the post-Web retail landscape as merchants expand into complementary product categories," Williams added.

"Meanwhile, consumer data will become the measure for all retail business decisions, from product launches to company mergers. The post-Web winners will be brand-name merchants with a strong off-line infrastructure and the ability to establish an online retail gateway."