Though it seems a little early to posit that online shoppers are experiencing "Internet fatigue," as a recent New York Times article does, growth in online sales does appear to be slowing.
According to Forrester Research, online sales will grow more slowly in 2007 than they did in 2006 in 18 of 24 categories it tracks. Book sales, for instance, will increase 11 percent this year vs. nearly 40 percent last year.
Similarly, Jupiter Research predicts that overall online sales will creep along at a 9 percent annual growth rate by the end of this decade -- not terrible, but far from the 25 percent growth rate experienced in 2004.
Part of the problem, says a Harvard Business School professor interviewed for the article, is that while physical stores have been working hard to upgrade the shopping experience for consumers, online stores haven't followed suit. Not only that, but because online shopping involves the same kind of mouse wrangling that so many of us do at our jobs every day, it just feels too much like work.
Retailers appear to be learning the same lesson that bankers did a decade or so ago. When you introduce new channels, consumers tend to use them all, not migrate from one to another. Such channels can be a competitive differentiator -- at least until everybody else has them.
Thus, retailers with both online and bricks-and-mortar stores must do the same thing that some financial services providers are trying to do: offer a consistent experience across all the channels and help customers move seamlessly between them. For retailers, that entails concepts such as allowing customers to buy goods online, but pick them up and (God forbid) return them in stores.
Of course, not all retailers have the "bricks" required for this so-called "clicks-and-bricks" strategy. Many of them will likely follow the lead of eBay, which is striving to make its shopping experience more akin to one that folks find in the physical world.
According to a recent Associated Press report, that includes adding more feedback criteria, making shipping costs more transparent, and introducing a feature that allows shoppers to create a wish list that will automatically enter them in new auctions if they fail to win auctions for certain items. Also in the works: product recommendation systems based on user preferences and shopping from mobile devices, social networking sites such as Facebook, and widgets on computer desktops.
Perhaps both eBay and online retail sites in general simply illustrate the point made by a Global Crown Capital analyst in the AP piece. "It's just that there's some finite limits to growth, and they're reaching that."