10 Trends Defining

US Online Retail

Scott Silverman
Executive Director, Shop.org
October 2007
 Trend 1:
Online Retail is Very
Big and Continues
to Grow

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 Online Retail is Still Growing
$250 60%
51% $220
48% 50%
$200
$176
40%
$150 $141
% YOY
US$B $114 25% 30%
24% 25% growth
$100
$76 20%

$50
10%

$0 0%
2002 2003 2004 2005 2006

3
Online Retail Grows as a Percent of Total Retail
50%
44% 44%
45%
40%
35%
30%
23% 2004
25%
17% 2007
20%
16%
15%
11% 10% 9%
10%
5% 4%
5%
0%
Computer Books Consumer Apparel Home
Hardward and electronics furnishings
software

4
 Trend 2:
The Competition Has
Never Been More
Fierce

5
New and Newly Energized Entrants…

• Manufacturers selling direct

• New dot-coms (low barrier to entry)
• Traditional retailers waking up to the e-
commerce opportunity
• International brands enter US via online

6
 …chasing the same customers

15%

10%
11%

8%
5% 6%
5% 4%
3% 3%
0%
2005 2006 2007 2008 2009 2010 2011
Growth of new online buyers
Source: JupiterResearch Internet Shopping Model, 11/06 (US only)

7
 Trend 3:
Shifting from Customer
Acquisition to
Customer Retention

8
Email to house list a priority

9
 “…the next
significant
opportunity for online
retail success is to
materially affect
conversion rates and
traffic patterns.”

10
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12
Customer Reviews

13
Trend 4: International Expansion

14
 Trend 5:
Multiple Channels vs.
Multi-channel?

15
 “While many retailers
have embarked on
efforts to enable in-store
pickup, Web-enabled
POS systems, cross-
channel customer
visibility, and clienteling
opportunities across
channels are promising
future endeavors and
have low adoption rates
today.”
16
Cross-Channel Retail Isn’t A Priority (Yet)

17
Role of Catalogs Evolve Due to Online

18
 Trend 6:
The Social Media
Conundrum

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 “…our research
indicates that
these tools [Web
2.0 and social
computing] are
very much in their
infancy as
marketing tools for
retailers.”
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Trend 7:

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Trend 8: Free Shipping Rules

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 Trend 9:
The Government is Watching
“…the Internet is not
something that you just dump
something on. It's not a big
truck. It's a series of tubes.”
United States Senator Ted Stevens
June 26, 2008

24
 Trend 10:
If All Else Fails,
Create a New Online
Retail Holiday

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Thank You
scott@shop.org
+1 (202) 626-8132