Report: E-Commerce To Grow 57 Percent in 2001

Despite a slowdown in growth during 2001, particularly for the first six months, e-commerce sales will increase 57 percent this year compared to 2000, according toan upcoming report by research firm eMarketer.

In previewing the report Saturday, eMarketer co-founder Geoffrey Ramsey told the E-Commerce Times that Internet sales are now more dependent on the “overall state of the economy” than any industry-specific factors.

“If overall spending decreases more than what analysts are predicting, if there’s a serious downturn, we’d have to adjust those numbers,” Ramsey said.

For now, Ramsey and eMarketer have concluded that online business will total US$65.9 billion in 2001, compared to $42.0 billion in the just completed year.

“The fact is that the Internet is not going away, and we’re going to continue to see a migration of dollars,” Ramsey said.

Building Off the Holidays

For the first quarter of 2001 alone, eMarketer predicted that Net sales will total $13.5 billion, an 8 percent increase over the $12.5 billion in sales recorded during the fourth quarter of 2000 — sales that included retail’s annual feast, the holiday shopping season.

However, over the same period a year ago, e-commerce increased 14 percent, according to eMarketer.

Similarly, eMarketer said that the predicted 12 percent gain from Q1 to Q2 of this year, to $15.1 billion, will be less than half of the 25 percent first-to-second quarter increase in 2000.

Ramsey attributed the predicted slowdown to continued growing pains for dot-com retailers, saying that “businesses are really having to tighten their belts and [get] smarter about running their business.”

Snowball in the Summer

By the same token, eMarketer has forecasted that stronger firms will work out many of their operating problems by the second half of the year. As a result, eMarketer said that online commerce will rise to $17.2 billion for this year’s third quarter and $20.1 billion for the fourth — quarter-to-quarter percentage increases of 14 and 17 percent that are more in line with last year’s improvements.

“E-commerce is chugging along,” Ramsey said. “It’s a snowball that’s grown and grown, and people that have bought online before will continue to buy online, and they’re going to buy more.”

Ramsey said that the average Net shopper spent $285 in the fourth quarter of 2000, compared to $215 in the fourth quarter of 1999.

No More Tests

eMarketer found that Q4 2000 sales were 71 percent higher than those of the fourth quarter of 1999. eMarketer’s forecast of a $20.1 billion fourth quarter in 2001 would represent a 61 percent increase over Q4 2000.

Despite the relative slowdown, the trends seem to indicate that e-commerce itself is no longer facing any tests for survival as a whole. Rather, 2001 figures to simply define more clearly what e-commerce is to be — which companies will survive, and in particular, whether there is very much room online for businesses that do not have offline partners or parents.

The End of Pure Plays?, an affiliate of offline retailer Kmart, was cited by Ramsey as an example of a successful brick-and-click combo.

Ramsey, who described the companies’ efforts as “pretty remarkable,”also noted that even though Amazon is generally considered a pure play — and a unique one at that — the e-tailer received a boost through its alliance with Toys ‘R’ Us.

Other analysts have said that the time has come for dot-com retailers to show their maturity.

“I think the key challenge in 2001 will be for e-commerce companies to be able to provide 100 percent solutions to consumers so that we can start entering mass market adoption,” Goldman Sachs analyst Anthony Noto told the E-Commerce Times. “The mass market has yet to come online and in order to derive accelerated growth, e-commerce has to cross the chasm.”

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