Thursday, May 20, 2004

E-commerce takes off

The Economist has an article about the way e-commerce is changing the way people do business [Link via Slate].

The raw numbers tell only part of the story. According to America's Department of Commerce, online retail sales in the world's biggest market last year rose by 26%, to $55 billion. That sounds a lot of money, but it amounts to only 1.6% of total retail sales. The vast majority of people still buy most things in the good old bricks-and-mortar world...

E-commerce is already very big, and it is going to get much bigger. But the actual value of transactions currently concluded online is dwarfed by the extraordinary influence the internet is exerting over purchases carried out in the offline world. That influence is becoming an integral part of e-commerce.

To start with, the internet is profoundly changing consumer behavior. One in five customers walking into a Sears department store in America to buy an electrical appliance will have researched their purchase online and most will know down to a dime what they intend to pay. More surprisingly, three out of four Americans start shopping for new cars online, even though most end up buying them from traditional dealers. The difference is that these customers come to the showroom armed with information about the car and the best available deals. Sometimes they even have computer print-outs identifying the particular vehicle from the dealer's stock that they want to buy.


Perhaps my advice to Makro wasn't too far-fetched after all. Who needs flammable retail floors, anyway...