On Line Retail vs. In Person Retail

Technology has always changed the way we do things. Sometimes a new technology wipes out an old way of doing things, but not very often. Usually, technology simply gives us more options of how to do things.

In Fort Wayne, Indiana, we used to have the Wabash Erie Canal, that started operation in 1843 and saw the last canal boat in 1874. The Fort Wayne Section of the canal was purchased by the railroads and those tracks are still in operation. Canal boats in the USA... gone.

Last week, when I needed to open a can of refried beans, I used an old fashioned can opener, not an electric one. Manual can openers in the USA... still around.

In the 20 plus years since Microsoft came up with the Windows Operating system and Internet Explorer, the growth of On Line Retail has been slowly growing until recently when the growth has exploded. Will On Line Retail replace In Person Retail? Never completely. As a matter of fact, it is unlikely that it will surpass In Person Retail because of one significant factor...Relationships.

Technology is just a tool to help us humans with our relationships with each other. The experience factor, the relationship factor, are all part of the us and is why we will continue to visit stores to touch, smell, and interact with the retailers and their stores in own towns.

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In my email was this research study which shows that on line retail will reflect the ups and downs of the overall economy, and yet has plenty of room to grow as the technology grows:

Online Retailing to Grow Slower, But At $30 Billion Annually

A recent report from Forrester Research, summarized by Internet Retailer, shows that Online retail sales in 2007 reached $175 billion, a 21% increase over $144.6 billion in 2006, the first significant drop in growth after years of around 25% growth.

The firm forecasts:

• $204 billion in online retail sales in 2008, 17% growth over the previous year
• $235.4 billion in 2009, 15% growth
• $267.8 billion in 2010, 14% growth
• $301 billion in 2011, 12% growth
• $334.7 billion in 2012, 11% growth

Sucharita Mulpuru, principal analyst at Forrester Research, notes "... declining year-over-year growth... for online commerce may represent a maturation of the e-commerce industry... the industry will add approximately $30 billion in additional revenue every year for the next five years... "

The report cites three major hurdles e-retailers face as the growth rate of online sales decreases:

• Most consumers still prefer stores
• The web channel is becoming increasingly seasonal
• Online shoppers tend not to browse

Internet Retailer, in quoting the report, includes these comparisons of consumer experience that influences selection of purchase location:

• "The in-store experience... is immediate, tangible and social... by shopping in stores, consumers can touch and feel items, avoid issues surrounding returns, and avert pesky shipping costs..."
• "While catalogs can often serve to drive customers to new products or stores, the 'spear-fishing' mentality of most online shoppers means there is less opportunity for retailers to effectively drive higher average order values or units per transactions."

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