E-Tail Reality Check

comScore projected that U.S. e-commerce for the holiday season will hit $19.6 billion. The firm also projected a 24 percent increase in U.S. e-commerce vs. 2004 for a full year total of $82.7 billion. Those are big, impressive numbers and indicate healthy growth in online spending. But contrast that with U.S. Census Bureau data that reflect total U.S. retail spending (2004) of more than $3.5 trillion.

Assuming the accuracy of the comScore projection and roughly eqivalent U.S. retail spending in 2005, e-commerce will represent something less than 2.5% of total U.S. retail spending. However, this gap doesn't reflect the influence the Internet is starting to have on offline retail spending. Indeed, the dominant paradigm into the foreseeable future is: online shopping, offline spending.

This is one of the reasons why in his ILM:05 keynote MSN's Erik Jorgensen said that for Microsoft "local is the most important vertical." (We disagree that it's a vertical, but agree that it's important 🙂 .)

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