January 19, 2001, 12:00 AM

Study Casts a Shadow on Web Retailing

In a darker report on Internet retailing, a new report by the Wharton School in Philadelphia shows a declining rate of online spending per person, even while total online retail spending is increasing. The report also tracks a significant dropout rate of online shoppers.

Some 15% of shoppers who made online purchases in 1997 did not make a purchase in 1998, and only half of the same group returned to make purchases in 1999. "No matter how well electronic retailers have done this holiday season, there are some fundamental factors that appear to be eroding the growth of spending and the growth of the market," says Jerry Lohse, research director of the Wharton Forum on Electronic Commerce. "The implication is that online shopping is just another way of shopping."

According to the forum, many forecasts for e-commerce spending and market growth assume linear increases in per person online spending. The current Wharton results indicate that those forecasts may need to be revised downward. Based on the latest survey, Wharton research estimates currently levels of consumer online spending at about $29.2 billion and projects that Internet retail sales will climb to $133 billion by 2004.

The Wharton Forum on Electronic Commerce has tracked more than 23,000 panelists since 1997, including 791 participants who have been on the panel for all three years.

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