Online shopping market in America is expected to be worth a whopping $36 billion by the year’s end, a new report has claimed.
Online retailers in the US turned over $14.9 billion in 1998 but this figure looks set to more than double this year, thanks to a 300 per cent increase in visitor traffic, a study by Boston Consulting Group and the Shop.org forum has found.
Last year the online shopping market was dominated by a handful of big players, with the top 50 sites accounting for just under 75 per cent of revenue, but this is changing as the more competitors enter the market.
Head of Boston’s ecommerce practice, David Pecaut, said 62 per cent of the 1998 revenue was generated by existing bricks and mortar retailers rather than the pure play startups such as Amazon.com, which have stolen the limelight so far.
The report identified a number of make or break factors for online retailers, including the ability to develop trust and customer loyalty, the provision of end to end customer service and the development of interactive merchandising and feedback systems.
The ability to fulfil orders on time had become an “acid test” for Internet merchants and those which did not have their own shipping facilities were struggling to compete.
Customers tended to gravitate towards well known brands, giving traditional retailers the advantage over startups which had to pour funds into establishing a credible identity, the report found.
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