Ecommerce on the Rise
A Home Business Article Contributed by Alina Sandor
Ecommerce: Driving the Economy
Ecommerce is a driving force in the economy today. No has commented on the state of ecommerce better than Commerce Secretary Don Evans: "Our robust Internet economy has driven American economic growth, technological innovation and global competitiveness over the past five years and we look to information technologies to support future growth."
The U.S. Government Working Group on Electronic Commerce 2nd Annual Report of 1999 states that seven years ago there were fewer than five million Americans using the Internet; today that number exceeds 100 million. And those 100 million are projected to exceed $1 trillion in ecommerce transactions over the next few years.
In the second quarter of 2004 alone retail ecommerce sales were $15.7 billion, which is up 23.4 percent, and total retail sales for the second quarter of 2004 were estimated at $919.0 billion! There is no doubt that ecommerce now a major contender for consumer's money.
What Does This Mean to Ecommerce Merchants
Ecommerce merchants are very happy with the returns brought by ecommerce sales. Every year that passes seems to make profits shoot through the roof.
In a 2001 survey held by Shop.org, an part of the National Retail Federation, and Forrester Research, an Internet research company, seventy percent of those surveyed reported positive operating margins from Web sales last year, compared with 56% in 2001 and 57% of those polled had revenues of at least $10 million online.
In 2003 though, according to The State of Retailing Online 7.0, an annual Shop.org study conducted by Forrester Research, of 150 retailers, 2003 online retail sales jumped 51 percent to $114 billion. The study also reported that online sales represent 5.4 percent of all retail sales, which was a major jump from their survey 2 years before Ecommerce retailers seem to have a bright future ahead of them.
Retailers do have some challenges, though. Online retailers did well with marketing costs in 2003, but struggled to maintain their ecommerce budgets in other areas. Overall marketing costs per order went from $8 to $4 due to ecommerce retailers, which slashed costs from $10 per order in 2002 to $2 in 2003. Although retailers were able to halve their marketing costs, customer service costs rose to $2.30 from $1.90 per order, and fulfillment costs skyrocketed from $6.30 to $9.80 per order in 2002.
The Bottom Line on Ecommerce
The bottom line seems to be that there is no force that can hold back ecommerce in the future. Making ecommerce more mainstream to the consumer is a major force in online sales. As more and more people realize the convenience of ecommerce compared to traditional shopping, the numbers will keep going higher.Consumers will also continue to expand their online buying into new product categories as they become more comfortable shopping online and dealing with ecommerce. This creates new opportunities for retailers to successfully grow their online businesses and profit.
