According to a recent article in the New York Times, e-Commerce is entering a period of stagnant sales, or even decline until the end of the decade.
Has online retailing entered the Dot Calm era?
Since the inception of the Web, online commerce has enjoyed hypergrowth, with annual sales increasing more than 25 percent over all, and far more rapidly in many categories. But in the last year, growth has slowed sharply in major sectors like books, tickets and office supplies.
Growth in online sales has also dropped dramatically in diverse categories like health and beauty products, computer peripherals and pet supplies. Analysts say it is a turning point and growth will continue to slow through the decade.
The reaction to the trend is apparent at Dell, which many had regarded as having mastered the science of selling computers online, but is now putting its PCs in Wal-Mart stores. Expedia has almost tripled the number of travel ticketing kiosks it puts in hotel lobbies and other places that attract tourists.
The slowdown is a result of several forces. Sales on the Internet are expected to reach $116 billion this year, or 5 percent of all retail sales, making it harder to maintain the same high growth rates. At the same time, consumers seem to be experiencing Internet fatigue and are changing their buying habits.
Frankly, I wonder if this isn’t mostly affecting the big stores online. I operate a number of small e-Commerce sites, and I have seen no stagnation or decline in sales. In fact, so far this has been a record year for my businesses. So, I have to wonder – am I the exception, or is this mostly the big guys that are experiencing this.
For me, I feel that if you find a good niche market that others can’t fill easily, you are in good shape. No matter what the trend is, if you have a niche that is difficult to find elsewhere, you will do well. That is how my various businesses online are, there are only limited places where you can get the things that I sell. I feel confident that my businesses will continue to flourish.
What about you? If you already have an online business, how are sales for you? If you don’t have an online business yet, does this scare you away from having one?
Its like cell phones a couple of years ago. If you looked at a graph concerning the uptake of cellphones over the past 20 years then the rise has slowed down because most people now have them. Its the same with internet sales I think, now that most people (who can affoed it) are online, the rise will be slower. Maybe when China and India get going with their huge populations getting online then things will increase at the rate they have done in the past. Even so, the rise is always going to be upwards.
Hi Phil – I agree with you, it is always going to be moving up. It’s just the rate of the growth that you have to watch out for.
Thanks for sharing your thoughts!
I also operate some e-commerce sites and have been doing better this year but it could be due to my sites aging. I’m just wondering how many of these so-called experts predicted the dot com boom so why should we believe them about the dot calm? Like you I believe the key is filling a niche that others can’t fill.
Hi Daniel – Yeah, I think there is a lot of truth in what you say… those same “experts” who are saying that e-commerce is in the decline also built up the net and caused the bubble to burst in 2000. Good point!