Dotcom mania may have ended, but selling products and services online has scarcely begun. In fact, estimates from a variety of sources have total online retail sales increasing approximately 30 percent in 2002. And after years of similarly rapid growth, the absolute numbers aren't tiny either: Projections based on the U.S. Department of Commerce's conservative data reports indicate that online sales of goods and services topped $42 billion in 2002. And the Department of Commerce doesn't include online travel sales, which typically account for 40 percent or more of online revenue.
One thing driving online sales growth is the still-increasing number of people going online. Market trackers at Jupiter Media Metrix forecast the number of online Americans will double in five years to 132 million. Because about half of Internet users buy something online during any particular year, that translates to solid growth for online commerce.
The online market isn't just growing; it's also changing. To begin with, the shoppers themselves are transforming. Once mostly men, they're now mostly women. Though the Net is seen as a youthful medium, seniors are the fastest-growing age group. And though ethnic groups have lagged behind the mainstream in embracing online, they are catching up fast. "While the general market is tending to flatten out a little bit, the ethnic market continues to have rapid growth," says Derene Allen, vice president of The Santiago Solutions Group, a San Francisco multicultural marketing consulting firm.
These groups all have their own reasons for shopping online, their own styles and their own favored purchases. They're buying a broader range of products and services as well. Once, goods were divided into those suitable for sale on the Internet and those not suitable. Supposedly, items such as furniture were not online-ready, for instance. But increasingly, nearly everything is being sold online. Furniture makes up most of the volume at PoshTots, a 16-person Glen Allen, Virginia, online seller of high-end children's products. "Our customers are buying cribs and beds," says Karen Booth Adams, 33-year-old co-founder, "and we sell a lot of playhouses."
Continuing growth of the online market calls for evolving business strategies as well. The frenzy to achieve first-mover advantage that characterized the early years of online retail has subsided. Today, selling online is less about having the latest technology and more about having the best insight into customers. "It's back to tried-and-true principles of marketing," says Keith Tudor, professor of marketing at Kennesaw State University in Kennesaw, Georgia. "Look at your customers' wants, needs and motivations."