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Travel, Online Retail Will Be a $108 Billion Business by 2003

More than 40 million U.S. households will be shopping online by 2003, producing $108 billion in revenues, according to a new report from Forrester Research Inc.

The report said online retail sales will account for 6 percent of all U.S. consumer retail spending in the United States by 2003.

Even currently, e-commerce is a blossoming business. By the end of 1998, nearly 9 million U.S. households will have shopped online for travel services and retail goods other than automobiles, generating $7.8 billion in online sales, the report said.

Retail e-commerce growth will soar as consumers overcome their security and privacy concerns and embrace the convenience of Web shopping, the report said. Unable to resist a rapidly expanding pool of consumers, retailers will dramatically increase their online product selection.

"Online retailing has left the experimental phase and is accelerating into the mainstream," said James L. McQuivey, an 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 online to shop, retailers will compete more aggressively for sales, in turn drawing still more consumers and merchants to the Web."

Deep product selection, easy shipping, and merchant promotions will keep convenience items such as like books, music, apparel, and flowers a favorite with consumers, leading to sales of more than $32 billion by 2003, the report said.

Researched purchases are information-driven, planned purchases like airline tickets and computers. Travel represents the single largest category today and will reach nearly $30 billion in sales by 2003. And by 2003, consumers will spend more than $56 billion overall on researched purchases.

Replenishment goods such as groceries and personal care will be slow to win broad consumer acceptance. With the exception of specialty foods and prescription refills, this category will be hampered by the lack of a feasible distribution model. By 2003, replenishment goods will account for $19 billion in sales, the report said.