Expect rapid rise in online shopping to peak, expert says

Published January 14 2013
Updated January 14 2013

NEW YORK — Shoppers spent more money online than ever during the holiday season, but the trend toward huge gains won't last forever.

That's the forecast of Sucharita Mulpuru, vice president of Forrester Research, which Sunday released its 2013 State of Retailing Online survey at the National Retail Federation's convention.

"Online retail is the pawn that is now the queen,'' she told an audience of retail executives gathered at the Jacob K. Javits Convention Center in New York City.

Where online sales used to be a small part of a retailer's business, it has become a powerful tool, she said, amounting to about 10 percent of a company's sales on average. Online retail sales totaled $226 billion in 2012, up from $177 billion in 2010.

Those figures will continue to rise but not as rapidly because the pool for potential new online customers is only so big, she said. And while many retailers will continue to develop mobile shopping for smartphones and tablets, those sales reflected just a small portion — $2 billion — of total online sales last year.

"Some retailers have been burned getting caught up in the hype of mobile,'' Mulpuru said. "The number of transactions done over phones is very small.''

Likewise, the number of sales through links on Facebook, Twitter and other social media is low.

Online retailers surveyed for the report said they will get back to basics this year by improving checkout, product details and the user experience. They also will try to increase the average order amount for repeat customers and target international markets.

Retailers will continue to face challenges associated with Web and mobile technology. Price matching, similar to what Target announced last week, will become a must to deal with "showrooming" — the practice of testing an item in a store but buying it online at a cheaper price.

Then there's the concern about what online retail giant Amazon will do. Its same-day shipping offer turned out to be expensive for many retailers, but not particularly valued among consumers.

Regardless, Mulpuru expects online sales on average will max out at about 20 percent of a retailer's sales. "Be prepared for the party to end, because it has to end at some point,'' she said.

The 102nd annual conference has 27,000 retail professionals in attendance, including 5,600 people from 70 countries.

Mindy Grossman, chief executive officer of St. Petersburg-based HSN, spoke on a panel about the importance of connecting with customers to build trust in a brand.