In its second-largest acquisition, Amazon buys the company for $970 million.
Retail sales will grow 5%, while online sales grow 30%, mostly due to current online buyers shopping more.
In a retailing market where sales will grow at 5% a year for the next five years, e-retailing sales will increase 30% a year, predicts Frank Badillo, senior retail economist at PricewaterhouseCoopers’ retail industry practice. In five years, e-retail sales will account for 2.5% of retail sales, up from 1% today. Sales in 2005 will be about $100 billion vs. $25 billion today.
Growth will come primarily from existing customers who are shopping online today, rather than from new Internet users, he says. “Of the mid to upper income households, 80% are online already,” he says. “Most of the growth will come from these customers figuring out what they want to do online.”
Badillo bases his expectations on the growth of e-retail sales as reported by the Commerce Department. “We finally have five or six quarters of reports there, so we can look at emerging seasonal patterns,” he says. He adds that the extrapolations include “a heavy dose of judgment.”