The International Handbook of Telecommunications Economics, Volume II
Edited by Gary Madden
Chapter 5: The economics of online retail markets
5. The economics of online retail markets Michael R. Ward INTRODUCTION The use of the Internet for the marketing of products and services has grown at an astonishing rate. Measuring this growth, however, has been problematic. Accurate forecasts of the amount of Internet retailing are diﬃcult to make and tend to focus on the US. Indeed, forecasts for the future volume of Internet retailing vary and may seem optimistic (Ward, 2001a). The volume of products purchased in 2000 via the Internet in the US was 30–40 billion United States dollars (USD). Forecasters expect this amount to grow to more than USD100 billion, and possibly exceed USD200 billion, by 2004 (see Table 5.1). Table 5.1 E-commerce forecasts, 1999–2004 (in USD billion) Year Source Emarketer Forrester Gartner Group Giga Information Group Lohse, Bellman and Johnson 1999 20.6 25.0 29.2 46.2 2000 37.0 33.0 2001 52.2 2002 76.3 152.0 70.5 2003 108.0 2004 Ͼ100.0 Ͼ184.0 Ͼ142.0 Ͼ233.0 97.0 Note: This table compares growth rates for e-commerce expenditure implied by factors aﬀecting growth with previously reported growth rates. The Gartner Group forecast is for North America. These forecasts represent average annual growth rates of 30–50 per cent. This represents a phenomenal pace of adoption for a new marketing channel, with the most optimistic forecast representing about 3 per cent of US disposable personal income in 2004. Of course, the pace of Internet adoption for electronic commerce (e-commerce) is not likely to slacken 92 The economics of online retail markets...
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