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BizReport : Ecommerce archives : June 18, 2007

Is the e-commerce industry slowing down?

A report in the New York Times, claiming a slowdown in e-commerce, has online tongues wagging.

by Helen Leggatt

According to the New York Times, we could be entering the “Dot Calm era”. Compared to last year, many online retail sectors are seeing a slowdown in sales growth. Books and apparel will see significantly lower online sales this year, but other segments such as appliances, computers and music will also slow down, says the article.

The NYT focuses on “internet fatigue” and the “sprucing up” of bricks-and-mortar stores as reasons for the slowdown in sales. Others feel that it’s the result of consumer’s balancing out their emotional and practical elements of online vs offline shopping sprees or the price of gas and the knock-on effect it has on delivery charges.

What the article does fail to mention is that e-retail is a fast maturing market and that the historical "hypergrowth" was bound to subside at some point. Growth is still happening; it’s just the rate of growth that’s slowing down. While annual sales growth rates of 25 percent were once the norm, analysts predict this will drop back to industry-wide rates around the 9 percent mark.

Tags: bricks-and-mortar, e-commerce, online shopping

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