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Online Sales Steady but not Spectacular

25 February 2002

Recent figures from Goldman Sachs show that US online sales grew by between 20% and 25% to $32bn in 2001. These figures do not match the heady expectations of online sales which fuelled the huge investment in online retailers in 2000. However they do show that money can be made out of selling on the Internet if you are either better at it, or have a good combination of 'clicks and mortar', where retail stock and existing fulfilment systems can support selling online.

Online shoppers are showing themselves to be strongly driven by price, which is not surprising when price comparisons are so easy to make on the Internet. Early hopes that those buying online would be prepared to pay premium prices have been dashed and online retailers are having to compete on price, rather as they do in direct mail.

This is why Amazon's approach is now 'everyday low pricing' and they have responded to their customers' desire for free shipping by offering this on orders worth more than $99. However the US, as the most mature Internet sales market, shows little sign of developing a real mass market online, as had been anticipated would happen as Internet access broadened to different demographic groups.

People seem to be using the Internet for different things, gathering information being one of them. Perhaps going shopping is just too much fun. Why cut out an activity which you positively enjoy and which enables you to see what you buy before you buy it?