E-commerce sales will average 25% growth yearly until 2007, Forrester says

E-retailing`s rocket ride will slow down a bit over the next five years, but not by much, according to a new five-year forecast from Forrester Research Inc. U.S. e-commerce has enjoyed 97% compound annual growth between 1997 and 2002, with sales to reach an estimated $72.1 billion (including online travel spending) this year from $2.4 billion five years ago. For e-retailing`s next five years, Forrester analyst Carrie Johnson predicts "consistent, rapid growth" to $217.8 billion in sales by 2007, which will represent a projected 8% of total retail sales.

Excluding auto, auto parts and travel sales, online sales will reach $43.1 billion this year and $164.4 billion in 2007, Forrester reports.

The web will account for an even higher percentage of sales in certain categories, according to Forrester, with an estimated 44% of all retail sales of computer software, 35% of computer hardware, 23% of small appliances and 21% of all music and video recordings transacted online.

Driving sales will be an influx of new shoppers joining experienced shoppers online and greater spending by both groups. By 2007, 26.4 million additional U.S. households will join the 36.5 million already shopping online for a total of 63 million or nearly two-thirds of U.S. households, Forrester projects. Sales at three pure-plays–-Amazon.com, eBay and travel site Expedia.com-–have now topped the $1 billion mark, and Dell.com, OfficeDepot.com and others are approaching that level.

The rosy forecasts, however, are modeled on current marketplace conditions, which Forrester notes could be upset by factors it can’t predict. "Consumer, economic, and even global volatility can cause swings of billions of dollars in this maturing market," notes Forrester, and it can swing both ways. Recession and rising unemployment could stifle sales both online and offline, for example, while proliferation of easy-to-use web shopping tools such as one-click shopping could boost online sales. While Forrester says it continually monitors the effect of such changing market forces, for now, "Online retail has torn off its training wheels and is forging ahead."