The world’s largest retailer will end free shipping for online orders under $50 Canadian starting April 2.
While the rate of growth slows, shoppers’ growing ease with the web will still drive more spending online this year, says Boston Consulting Group’s James Vogtle.
In the wake of recent events, Boston Consulting Group will revisit its spring prediction of 46% growth in online retail spending for 2001, says e-commerce research director James Vogtle. But the trend is already clear: while the growth curve is slowing, the trend still up.
Boston Consulting notes that online spending increased 132% from 1998 to 1999, and 66% from 1999 to 2000. Though it has yet to revise its 2001 forecast, Vogtle says that growth, though slower, will still be up because a higher proportion of consumer spending is going online.
“The number of people with Internet access is increasing. The percentage of those who’ve ever purchased anything online has increased, as well as those already more familiars with shopping online,” he says. “As people become more accustomed to using the Internet, they shift more of their spending online. So not only do you have more people shopping online, but a higher percentage of their total purchases are going there.”
That still leaves two other key factors affecting retail overall this year: a recession and consumers` potential concerns about security post-Sept. 11. Vogtle says the recession may actually help lift online sales. “The Internet is perceived as a place to get great deals,” he says. “A lot of retailers have added clearance areas to their sites. And if you’re got a limited budget, you’re going to spend it as effectively as you can – the Internet is a far better way to research products than in a store.”
As to the effect of possible security concerns on store shopping – and any lift that may result for other sales channels. – Vogtle remains something of a skeptic, although he does say he’s spoken to retailers in last few weeks who report that web and catalog sales are holding much more steady than store sales. “It’ll depend on the type of store, -- mall-based or freestanding –and the type of product,” he says. “Take groceries – people aren’t going to quit buying them.”