The Emerging Landscape for Retail E-Commerce

On-line retail sales of goods and services are projected to grow from $45 billion in 2000, or 1.5 percent of total retail sales, to $269 billion in 2005, or 7.8 percent of total retail sales projected for that year (Dykema, 2000). In addition to this substantial growth in on-line sales, consumers increasingly rely on information collected on-line to research a lot of purchases that are concluded over traditional “bricks and mortar” channels, especially for high value durable goods, such as electronics and automobiles. Such purchases influenced by the Internet are estimated to grow from $13 billion in 2000 to $378 billion in 2005 (Dykema, 2000), or 10.8 percent of projected retail sales. This would bring the total retail sales affected by e-commerce in 2005 to $647 billion, or 18.5 percent of total retail sales. Retail e-commerce is evolving to encompass a wide variety of goods and services. Leisure travel will be the leading category in 2000 with 27.2 percent of on-line sales, followed by books, music, videos and software (14.9 percent), computers and electronics (13.6 percent) and apparel (11.3 percent). By 2005, consumables (like food, beverages, supplies, health and beauty aids, and pet supplies) are projected to amount to 18 percent of on-line retail sales, followed by apparel (16 percent), computers and electronics (12.4 percent), automobiles (12.2 percent) and leisure travel (12.1 percent), while the share of books, music, videos and software will fall to 9.6 percent (Dykema, 2000). Given the growing role that e-commerce will play in retail markets, this paper focuses on how the Internet is affecting these markets, and how the resulting