Consumers Are Turning to Use Commerce Facilities for Commercial Purposes
By Priya George
Despite the IT-sector meltdown between 2000 and 2002, electronic commerce has become an increasingly important part of the economy. People are using the Internet for commercial purposes, including shopping for and purchasing the full range of consumer goods, arranging travel, banking, and trading stocks.
According to the Digital Economy Factbook, 2005, online sales (including travel) were USD 176.4 billion, an increase of 25 percent over 2004. Online sales excluding travel were USD 113.6 billion. Online sales (including travel) in 2006 are expected to reach USD 211.4 billion, a 20-percent increase over 2005. Online sales excluding travel are expected to reach USD 138 billion in 2006.
"The two fastest-growing categories are expected to be pet supplies and cosmetics and fragrances. Leading online sales destinations, such as Amazon and eBay, are among the strongest firms serving the Business-to-Consumer (B2C) market. In addition, more 'bricks and mortar' retailers have developed successful 'bricks and clicks' operations that depend on Internet presence in addition to traditional retail space", Gifford writes.
The much larger Internet Business-to-Business (B2B) market continues to grow rapidly. E-marketplaces have emerged that enable firms to buy and sell goods more efficiently, reducing the costs of effecting transactions and enabling firms to collaborate more productively through supply chain management.
In mid-2005, the 18 percent of the US online buying population who spent the most money online were responsible for 46 percent of online spending. In addition to the increase in online purchases, Internet users are also selling things online more than in the past. As of late 2005, about 17 percent of US Internet users (25 million people) have sold something online.
Business-to-Consumer and Business-to-Business E-Commerce
According to the US Census Bureau, US total retail sales B2C reached USD 976.1 billion in the first quarter of 2006, of which USD 25.2 billion (2.6 percent) was e-commerce. The most recent annual data from the Census Bureau are for 2004, when e-commerce made up 20.1 percent of total B2B revenues (USD1.8 trillion of USD 9.1 trillion), compared with only 1.5 percent of B2C revenues (USD 0.13 trillion of USD 8.9 trillion).
Business-to-consumer e-commerce grew 21.5 percent from 2003 to 2004, compared with 13.9-percent growth for business-to-business e-commerce over the same period.
A Shop.org-Forrester Research Study concluded that online retail sales (including travel) would reach USD211.4 billion in 2006.
Total online consumer spending (including travel) during the holiday season (November and December) of 2005 reached .2 billion, a 22-percent increase over 2004’s USD 23.1 billion for the same period.
Internet usage is affecting offline as well as online commerce. comScore found that, of the people who purchased an item related to their search query, 63 percent purchased the item offline.
JupiterResearch predicts that 71 percent of Internet users will use the Internet to shop in 2010, a modest increase from 2005’s 65 percent. However, in 2010 the Internet is expected to ’influence‘ almost half of total retail sales, a significant increase over 2005’s 27 percent.
In December of 2005, the Fathom Online keyword price index, which tracks prices for the top spots for the 500 most queried searches in a variety of industry categories, was highest for the mortgage industry, at USD 3.30, with the investing, broadband, and automotive industries following at USD1.60, USD1.56, and USD1.52, respectively.
Online Advertising
The total advertising market in the US in 2005 was USD240 billion, a 3.9-percent increase from 2004. Internet advertising has been the fastest-growing component of total advertising, averaging 57-percent annual growth over the past 10 years, though growth was only 24 percent from 2004 to 2005. Over the past year, satellite radio advertising revenue grew a whopping 235 percent, with interactive TV ad revenue growing 116 percent.
Online Finance
A comScore report found that 40 million Americans were online banking customers in the last quarter of 2005, a 27-percent increase from a year earlier. Still, the rate of adoption is slowing; there was a mere 3.1-percent increase since the previous quarter, the lowest increase in three years. Over the next few years, the number of online banking households is expected to grow only 4 percent per year, from 45.4 million in 2006 to 56.2 million in 2010.
Online Travel
After the events of September 11, 2001, the travel industry as a whole saw a downturn in revenues for a while. But then the industry started growing again, and the number of people flying in America is approximately the same as it was prior to September 11, 2001.
People online are spending money, the fact book says. US online retail sales were USD 23.6 billion in the fourth quarter of 2005, up from USD 19.1 billion in the fourth quarter of 2004 and USD 9.4bn in the fourth quarter of 2001. E-commerce represented 2.5 percent of total retail sales in the US in the fourth quarter of 2005, steadily rising from 0.6 percent in the fourth quarter of 1999.
