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Online sales due to plateau

Experts say retailers will have to battle for new customers or sell more to present ones.

By MARK ALBRIGHT
Published February 2, 2007


KISSIMMEE - Internet shopping sales soared 24 percent to $100-billion in 2006, but it's hardly blues skies on the industry horizon.

For starters, experts forecast the robust sales gains will fall to a more earthly 4 or 5 percent a year within four or five years because most people expected to be buying online already are.

"It's becoming a mature industry," said Patti Freeman Evans, senior analyst with Jupiter Research. "There won't be more fish in the pond, so sales growth will have to come from rivals in a huge sea of competitors or by getting existing customers to buy more."

So far that has not been happening.

The sobering outlook was hardly news to more than 500 Web shopping executives gathered here at the annual Shop.org convention. Topic No. 1 at the online shopping industry's biggest trade group gathering was a search to find new ways to keep the magic alive.

A decade since retailing online became a mainstream phenomenon, some sites are finally experimenting with single screen ordering rather than making customers suffer through page after page. And speakers said sites should become entertaining, informational and faster at providing relevant information while marketing a brand identity.

"Nordstrom.com looks and works exactly the same as Walmart.com," said Doug Mack, chief executive of Scene 7, a platform for 400 Web retailers. "How can that be?"

Mail order, which has been around since the 19th century, has held about 13 percent of all general merchandise sales for years. This year, catalogs dropped to 7 percent of all sales. Online retailers, which are another version of mail order, rose to 5 percent.

"Right now I see online sales growing to 7 percent in five years and peaking," said Jupiter Research's Evans.

"Basically all we've done in the past decade is what Sears did with the catalog," said Joe Chung, chief executive of Allurent Inc., a company that supports Internet commerce.

Several speakers said the Internet will continue to grow as a communications and information source, so that's probably where its role will increase in retail.

Staff Writer Mark Albright can be reached at 727893-8252 or albright@sptimes.com.

Selling online shopping

Here are some strategies online retailers plan to exploit.

Customer reviews

Invented by Amazon.com, customer reviews are now credible with 62 percent of all online shoppers. Some experts think posted reviews, both the good and bad, are far more powerful than advertising. Many sites now put buttons on each item soliciting customers to report how the product worked for them. Some sites now syndicate their product reviews to other so-called "content aggregator" sites in return for a free ad and referral link.

Advocates

Called mavens by The Tipping Point author Malcolm Gladwell, these are "inherently helpful" people who gather and share product and style information with their friends and social peer group. Their influential advice is spread to eight times as many people as the average person. So some retailers are trying to insinuate themselves into the social networks where these people hang out, including photo-sharing sites MySpace and YouTube. A study released by Yahoo! Inc. estimates 43-million people fit the description and influence $1-trillion in retail sales.

Cell phones

Now in the hands of 205-million people, cell phones and other wireless devices are a huge communications community thanks to text messaging, camera phones, Internet information that fits in a tiny picture and, soon, as a trigger for built-in payment cards. While many people shop stores armed with cell phones, online shopping sites so far are designed for desktop-size screens.