Online retailing to drop? I don’t think so

Thursday, September 6, 2007

From an article today on Money Morning:

More than a decade after Internet pioneer Amazon.com burst upon the scene and revolutionized online retailing, experts are projecting that Internet-based shopping is destined to fall out of favor.

In the next five to 10 years, those who are already comfortable shopping online are likely to grow even more so. But the bulk of the folks who haven’t already made purchases will likely be staying on the sidelines, experts told The Associated Press.

Although I agree that store-based retail will outstrip online retailing for a long time to come, I just can’t see an actual decline in online retail sales, for several reasons:

  1. Although the boomers are starting to retire and will have more time to spend on shopping in person, they’re fairly tech-savvy and will likely keep shopping online for the convenience. That portion of the market will likely stay stable, or drop slightly as their income drops on retirement.
  2. The younger generations — X, Y, whatever — are increasing their earning power and therefore their disposable income, and they’re definitely shopping online. This part of the market will continue to grow.
  3. Some large number of “the bulk of the folks who haven’t already made purchases” are in the 65+ age range, and will die off. Although this doesn’t increase the amount of online shopping (except maybe for their grandkids with the inheritance), it does pull down that part of the curve when you’re looking at the number of people who have never shopped online.
  4. More stores are offering online shopping. For those of us with a preference for online to in-store shopping, that means that more of our disposable income will go to online shopping as it becomes available.
  5. Small businesses are increasingly shopping online to save time and money: I buy office supplies, computers, office furniture and anything else that I can find for my business online.

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