Online Retail Grows by 20% This Year to $211 Billion

Shop.org just released its ninth annual ecommerce study. It projects $211 billion in ecommerce revenue this year, up from $176 last year.

The forecast $211.4 billion includes travel, a category valued with revenues of $73.4 billion in 2006. The top non-travel categories include computer hardware and software ($16.8 billion); autos and auto parts ($15.9 billion); and apparel, accessories and footwear ($13.8 billion). Cosmetics and fragrances ($800 million) and pet supplies ($500 million) are expected to experience over 30 percent growth in 2006, more than any other categories. Pet supplies is a new category tracked in this year’s report.

Integration between online and offline activity is key for retailers who report 22 percent of offline sales are influenced by the Web. Retail Web sites are also a viable channel to reach new customers; 38 percent of online customers are first-time buyers.

Amazing.

Speaking of online retail, I just saw an Inc. Magazine profile of the largest internet shoe retailer. It turns out the entrepreneur running Zappos.com, is Tony Hseih, who sold LinkExchange to Microsoft in 1998 for $265 million (I was a huge user of LinkExchange–it was one of our best sources of traffic in the early days of Ancestry.com). Zappos.com had $252 million in online shoe sales last year, and they are obsessive about great customer service.

I love this quote:

We have to untrain employees’ bad habits from previous call centers, where they’re trying to be more efficient by minimizing the time they talk to the customer. If someone is looking for a specific shoe and we happen to be out of stock, we have employees direct those people to competitors’ sites.

Another Inc. Magazine profile describes how Utah entrepreneur Morgan Lynch built Logoworks into a successful online business. Revenue last year was $7.3 million.

2 Comments

  1. Zappos is a really interesting business model. I live in Las Vegas and participated in the Donald W. Reynolds Nevada Governor’s Cup. Turns out one of my judges was Nick Swinmurn who founded zappos. Nick stook out in stark contrast to the other judges. He had a large go-t(however you spell it) and was in a t-shirt and shorts or jeans.

    I guess when you’re as successful as he was you can wear what you want. It felt good when I won the competition knowing that someone who understood e-commerce judged my idea. I should also note(although this comment is really going off target now) that the BYU business plan competition is the reason I won the nevada competition.

  2. Dana Rosen

    Hi Paul,
    My name is Dana, a graphic designer from Israel.
    I’m specializing in brand identities & packaging design, retail world of course, mainly working with the food industry.
    Here in Israel, designers, as apposed to the states, are often required to master a wide range of experties, in order to be able to respond to their clients in a very dinamic & flexible manner, and to stand the tough Israeli competition.
    This led both me & my partner to dig deeper into the interactive world. Due to the fact that we are working with the most significant companies in the Israeli market, it became a kind of expectation from us- expressing our creativity & strategic atitute in various disciplins.
    I must say, that this is a very interesting journey for us.
    Along the way, I “bumped” into your article, and I just had to let you know how interesting it was for us to read.
    So, now that you know, maybe it might be interesting for you to learn some more about us!!
    We can be reached at:
    Dana Rosen: Mobile: +972-52-2934003
    E-Mail: do-it@danarosen.co.il
    Micha Givon: Mobile: +972-54-4242412
    E-Mail: hippon@zahav.net.il
    Anyway, It was a great reading!
    I hope to hear from you somehow.
    Best, Dana, Israel.

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