Some Buyers Grow Web-Weary, and Online Sales Lag - New York Times
Growth rates for online sales are slowing down in numerous other segments as well, including appliances, sporting goods, auto parts, computer peripherals, and even music and videos. Forrester says that sales growth is pulling back in 18 of the 24 categories it measures.
Jupiter Research, another market research firm, says the growth rate has peaked. It projects that overall online sales growth will slow to 9 percent a year by the end of the decade from as much as 25 percent in 2004.
Early financial results from e-commerce companies bear out the trend. EBay reported that revenue from Web site sales increased by just 1 percent in the first three months of this year compared with the same period last year. Bookings from Expedia’s North American Web sites rose by only 1 percent in the first quarter of this year. And Dell said that revenue in the Americas — United States, Canada and Latin America — for the three months ended May 4 was $8.9 billion, or nearly unchanged from the same period last year.
“There’s a recognition that some customers like a more interactive experience,” said Alex Gruzen, senior vice president for consumer products at Dell. “They like shopping and they want to go retail.”
The turning point comes as most adult Americans, and many of their children, are already shopping online.
Analysts project that by 2011, online sales will account for nearly 7 percent of overall retail sales, though categories like computer hardware and software generate more than 40 percent of their sales on the Internet.
There are other factors at work as well, including a push by companies like Apple, Starbucks and the big shopping malls to make the in-store experience more compelling.
Nancy F. Koehn, a professor at Harvard Business School who studies retailing and consumer habits, said that the leveling off of e-commerce reflected the practical and psychological limitations of shopping online. She said that as physical stores have made the in-person buying experience more pleasurable, online stores have continued to give shoppers a blasé experience. In addition, online shopping, because it involves a computer, feels like work.
“It’s not like you go onto Amazon and think: ‘I’m a little depressed. I’ll go onto this site and get transported,’ ” she said, noting that online shopping is more a chore than an escape.
But Ms. Koehn and others say that online shopping is running into practical problems, too. For one, Ms. Koehn noted, online sellers have been steadily raising their shipping fees to bolster profits or make up for their low prices.
In response, a so-called clicks-and-bricks hybrid model is emerging, said Dan Whaley, the founder of GetThere, which became one of the largest Internet travel businesses after it was acquired by Sabre Holdings.
The bookseller Borders, for example, recently revamped its Web site to allow users to reserve books online and pick them up in the store. Similar services were started by companies like Best Buy and Sears. Other retailers are working to follow suit.
“You don’t realize how powerful of a phenomenon this new strategy has become,” Mr. Whaley said. “Nearly every big box retailer is opening it up.”
Barnes & Noble recently upgraded its site to include online book clubs, reader forums and interviews with authors. The company hopes the changes will make the online world feel more like the offline one, said Marie J. Toulantis, the chief executive of BarnesandNoble.com. “We emulate the in-store experience by having a book club online,” she said.
The retailers that have started in-store pickup programs, like Sears and REI, have found that customers who choose the hybrid model are more likely to buy additional products when they pick up their items, said Patti Freeman Evans, an analyst at Jupiter Research.
Consumers are generally not committed to one form of buying over the other. Maggie Hake, 21, a recent college graduate heading to Africa in the fall to join the Peace Corps, said that when she needs to buy something for her Macintosh computer, she prefers visiting a store. “I trust it more,” she said. “I want to be sure there’s a person there if something goes wrong.”
Ms. Hake, who lives in Kentfield, Calif., just north of San Francisco, does like shopping online for certain things, particularly shoes, which are hard to find in her size. “I’ve got big feet — size 12.5 in women’s,” she said. “I also buy textbooks online. They’re cheaper.”
John Morgan, an economics professor from the Haas School of Business at the University of California, Berkeley, said he expected online commerce to continue to increase, partly because it remains less than 1 percent of the overall economy. “There’s still a lot of head room for people to grow,” he said.
Growth rates for online sales are slowing down in numerous other segments as well, including appliances, sporting goods, auto parts, computer peripherals, and even music and videos. Forrester says that sales growth is pulling back in 18 of the 24 categories it measures.
Jupiter Research, another market research firm, says the growth rate has peaked. It projects that overall online sales growth will slow to 9 percent a year by the end of the decade from as much as 25 percent in 2004.
Early financial results from e-commerce companies bear out the trend. EBay reported that revenue from Web site sales increased by just 1 percent in the first three months of this year compared with the same period last year. Bookings from Expedia’s North American Web sites rose by only 1 percent in the first quarter of this year. And Dell said that revenue in the Americas — United States, Canada and Latin America — for the three months ended May 4 was $8.9 billion, or nearly unchanged from the same period last year.
“There’s a recognition that some customers like a more interactive experience,” said Alex Gruzen, senior vice president for consumer products at Dell. “They like shopping and they want to go retail.”
The turning point comes as most adult Americans, and many of their children, are already shopping online.
Analysts project that by 2011, online sales will account for nearly 7 percent of overall retail sales, though categories like computer hardware and software generate more than 40 percent of their sales on the Internet.
There are other factors at work as well, including a push by companies like Apple, Starbucks and the big shopping malls to make the in-store experience more compelling.
Nancy F. Koehn, a professor at Harvard Business School who studies retailing and consumer habits, said that the leveling off of e-commerce reflected the practical and psychological limitations of shopping online. She said that as physical stores have made the in-person buying experience more pleasurable, online stores have continued to give shoppers a blasé experience. In addition, online shopping, because it involves a computer, feels like work.
“It’s not like you go onto Amazon and think: ‘I’m a little depressed. I’ll go onto this site and get transported,’ ” she said, noting that online shopping is more a chore than an escape.
But Ms. Koehn and others say that online shopping is running into practical problems, too. For one, Ms. Koehn noted, online sellers have been steadily raising their shipping fees to bolster profits or make up for their low prices.
In response, a so-called clicks-and-bricks hybrid model is emerging, said Dan Whaley, the founder of GetThere, which became one of the largest Internet travel businesses after it was acquired by Sabre Holdings.
The bookseller Borders, for example, recently revamped its Web site to allow users to reserve books online and pick them up in the store. Similar services were started by companies like Best Buy and Sears. Other retailers are working to follow suit.
“You don’t realize how powerful of a phenomenon this new strategy has become,” Mr. Whaley said. “Nearly every big box retailer is opening it up.”
Barnes & Noble recently upgraded its site to include online book clubs, reader forums and interviews with authors. The company hopes the changes will make the online world feel more like the offline one, said Marie J. Toulantis, the chief executive of BarnesandNoble.com. “We emulate the in-store experience by having a book club online,” she said.
The retailers that have started in-store pickup programs, like Sears and REI, have found that customers who choose the hybrid model are more likely to buy additional products when they pick up their items, said Patti Freeman Evans, an analyst at Jupiter Research.
Consumers are generally not committed to one form of buying over the other. Maggie Hake, 21, a recent college graduate heading to Africa in the fall to join the Peace Corps, said that when she needs to buy something for her Macintosh computer, she prefers visiting a store. “I trust it more,” she said. “I want to be sure there’s a person there if something goes wrong.”
Ms. Hake, who lives in Kentfield, Calif., just north of San Francisco, does like shopping online for certain things, particularly shoes, which are hard to find in her size. “I’ve got big feet — size 12.5 in women’s,” she said. “I also buy textbooks online. They’re cheaper.”
John Morgan, an economics professor from the Haas School of Business at the University of California, Berkeley, said he expected online commerce to continue to increase, partly because it remains less than 1 percent of the overall economy. “There’s still a lot of head room for people to grow,” he said.
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