Development of Online vs Offline Retailing from 1999 to 2009

Introduction.

The growth and development of online compared retailing compared to offline retailing, is beyond doubt one of the major success stories of the internet. At one level online retailing has opened up shopping opportunities to those living in remote regions, or with mobility issues, beyond what they could have previously imagined. Whilst just about anyone with access to a computer will, at some time, have at least looked to compare online prices to High Street stores, even if they don’t then go on to buy online. However, the fact of the matter is that ever increasing numbers of people are buying online, a trend that shows little sign of slowing or reversing.

Offline-Online retailing trends.

The previous 10 years has seen a relentless rise in the amount of money that was spent shopping online. Yet despite that the actual value of High Street, or offline, spending on shopping also increased during the same period, albeit not as rapidly nor by as much. This is mainly due to the fact that the decade was generally one of prosperity and, relatively, full employment; meaning that people had plenty of disposable income with which to buy things other than those required for day-to-day living. Even the recent worldwide economic recession doesn’t seem to be stopping us from shopping on the High Street. So, whilst individual company’s sales figures may be down on previous years, there is actually no evidence to show that the total amount that we spend with offline, High Street, retailers is currently significantly lower than before. However, it is anticipated that High Street sales will stagnate in the near future rather than rise. In that same period, on average, online retailing has grown by anything up to 30% year on year. For example, in 2005 online shopping in the USA was reckoned to be worth $65 billion, yet by the end of 2007 the total value of online sales was a staggering $146 billion; far outstripping even the wildest expectations. With the latest forecasts estimating a near $200 billion online sales figure for 2009, just in the USA, why are more and more people spending more and more money online?

Why is online retailing so popular?

 Online retailing has a long way to go before it catches up with the sort of figures spent on our High Streets offline. However, why are more and more people being attracted to online shopping? A key answer to that question is the rise in online price comparison websites and shopping portals. Barely had Tim Berners-Lee dotted the last ‘i’ and crossed the last ‘t’ in his original html code - than people were selling things on the internet. But, in the early days of the world wide web finding things for sale wasn’t as easy as it is now. Towards the end of the 1990s server-side price comparison engines started to be developed, taking advantage of the developments in graphical user interfaces on both computers and the internet. This meant that as the 2000s progressed, rather than searching for a particular website that was selling things we could now just as easily search for the items we wanted; and let the price comparison websites recommend which stores to buy from and where to look for the best prices. Whilst the idea of shopping online spread by a form of social contagion, in those early days of online shopping many users would still actually buy their products from online retailers whose names they recognized from the High Street. Sometimes they would even just use the internet to find bargain prices and stores to shop at; and then literally going out to that store rather than making the purchase online. In the last  four or five years these reservations about online shopping have largely disappeared and most people now are entirely comfortable with ordering from virtual stores, that exist only online. It was this shift that saw such a huge rise in online shopping figures in the mid-2000s.

Online retailing in 2009.

The very fact that there is a worldwide recession will further increase online sales. People will increasingly seek lower prices for all manner of goods. The fact that many online stores offer free delivery to your door, on top of prices lower than you would pay on the High Street, is yet another incentive to shop online. Although highly variable from region to region, progress being made in the roll-out of broadband services and ever faster services will, again, increase the usage of online shopping portals. Finally, another year-on-year trend has been the fourth quarter phenomena. The run up to, and immediately after, the Christmas period always leads to surge in online sales. This isn’t due to last minute shopping, but simply that most gifts can be found at bargain prices on the internet; whilst holiday shopping online is simply so much easier.