Debunking the Myth of Ecommerce's Demise

Jan 2
23:14

2024

Rob Spiegel

Rob Spiegel

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Despite the dot com bubble burst that left Nasdaq in a state of disgrace, millions of persistent internet consumers have remained unfazed. They continue to shop online, seemingly oblivious to the crumbling online marketplace around them. While this narrative of resilience isn't a favorite among business writers, the reality is that online retail continues to thrive. This article delves into the current state of ecommerce, debunking the myth of its impending doom.

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The Resilience of Online Retail

While there has been a slight dip in online sales post-Christmas,Debunking the Myth of Ecommerce's Demise Articles this is a trend that most online retailers are accustomed to. After all, traditional retailers have been dealing with post-holiday blues since the mid-1800s when the English transitioned from wassailing to children's toys.

In an attempt to gauge the impact of the dot com crash on online commerce, we examined recent reports on internet retail sales. While we did notice a slight slowdown in growth, there was no evidence of a contraction in consumer behavior. The decline seems to be confined to the number of dot coms, not the number of consumers. In fact, if we disregard the inflated expectations of the internet, its growth is progressing quite well. By any standard other than the dot com boom mentality, the expansion of the internet continues to be quite impressive.

Consistent Online Purchasing Behavior

According to a report by Greenfield Online, for 10 consecutive quarters, 60 percent of U.S. online consumers have made at least one purchase on the web within a 90-day period. Additionally, 28 percent of these shoppers have clicked on internet ads while shopping. As expected, those with an annual income of $50,000 and above are more likely to purchase goods (81 percent) than those whose income is below $50,000 (64 percent). Women on the net buy at a slightly higher rate (74 percent) than men (71 percent). The top categories of goods continue to be books and CDs, followed by clothing, toys, and computer software.

Affluent Consumers and Online Shopping

Forrester Research conducted a study on the shopping habits of affluent consumers, those with investable assets of $1 million or more. The study found that these shoppers value strong basic service over virtual exclusivity, extravagance, and entertainment. "Affluent shoppers have been buying longer, feel more comfortable buying, buy more frequently and, of course, spend more money," said Ekaterina O. Walsh, a senior analyst at Forrester. "They buy online for the same reasons that all online buyers do and care about price and positive experiences with web stores." Forrester recommends that luxury goods sellers focus on ease of purchase and a convenient return process.

Ecommerce Traffic Trends

PC Data Online reported a 4 percent decline in traffic to leading ecommerce sites in February, following an 18 percent seasonal drop in January. Analysts at Goldman Sachs attributed this to post-holiday seasonality, a slowdown in the rate of new consumers adopting ecommerce, and slower overall consumer spending. However, this year's figures are up 63 percent over last year. That's right, a 63 percent increase!

Key Features for Ecommerce Growth

A survey by consulting giant PricewaterhouseCoopers identified site features that are most likely to drive sales. The research found that, apart from search capabilities and close-up product views, most website features are seldom used by the majority of internet shoppers. The search function is the top feature used by consumers, with 77 percent saying they have used search functions while shopping.

Other site features such as wish-lists and personalization were found to be less important to shoppers. However, a study by the International eRetail Association listed wish-lists as a tool that works well for building loyalty, so it's important not to make assumptions based on a single study.

In conclusion, despite the doom and gloom that pervades the business media, internet retailing continues to grow rapidly. To paraphrase Mark Twain, the rumors of the death of retail ecommerce have been greatly exaggerated.