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Online Retailing in North America to Hit $61 Billion

Even as some research firms warn of an imminent shake-out in the world of e-commerce, along comes another rosy study predicting that B2C online retailing this year will climb to $61 billion in North America alone, up from $33 billion last year.

The figures were released by Shop.org, the trade association for online retailers, and come from "The State of Online Retailing 3.0," a study conducted by The Boston Consulting Group.

Based on data from 412 online retailers, the study showed that total 1999 online business-to-consumer revenues across all categories grew 120 percent to $33.1 billion, representing 1.4 percent of all retail sales.

An additional $13.1 billion was spent by businesses (as opposed to consumers) at retail Web sites in such categories as travel, office supplies and computer software.

In 2000, the market is expected to grow 85 percent and surpass $61 billion in revenues, the study predicts.

Shop.org said that "these results are the most definitive market sizing figures currently available, as they incorporate the largest sample size of any private-sector research firm. The results also include $6.8 billion in revenues generated by nontraditional retailers, such as manufacturers and person-to- person auctions which are omitted by the US Census Bureau and other researchers."

"While financial markets for online stocks are in turmoil, the underlying growth of the online retailing industry continues unabated," said David Pecaut, senior vice president and global co-leader of The Boston Consulting Group's E-Commerce Practice. "Online retailing is here to stay and will continue to gain significant share in 2000."

Perhaps, but growing pains are likely, at least according to Forrester Research, which recently released its own report predicting that "the combination of weak financials, increasing competitive pressures and investor flight will drive most of today's dot-com retailers out of business by 2001."

"While some online retailers have had to revisit their business plans and revenue models simply to remain in the game, others have shown tremendous revenue growth in the past six months," said Donna Iucolano, head of Shop.org's Committee on Internet Shopping Research. "The rest of this year promises to be a roller-coaster for e-commerce companies; however, those companies with a strong consumer focus and an eye toward maximizing profits will come through unscathed."

According to the report, the continued growth of the online retail market is a result of the boom in the online population, an increasing number of off-line retailers establishing a strong presence online, and the emergence of new nontraditional retail business models. These new players, which include auctions, buying groups, and manufacturers and distributors that sell directly to the consumer, accounted for more than 35 percent of products sold online in 1999.



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