“The Sky is Falling” on eCommerce Spending



eMarketer Daily looked into its crystal ball once again Monday to produce another collection of contradictory studies and quotations. This time, we get to debate whether eCommerce will plateau soon or continue to grow the way it has (article free & live for a limited time).

The problem with exponential or even linear growth is that as you get bigger and bigger, it becomes more and more difficult to sustain the same rate of growth—but not necessarily the same amount of growth. For example, if there are 100 retailers online in 2005, 50 new retailers in 2006 is 50% growth. Add 50 more retailers in 2007, and suddenly the growth rate “plummets” to 33.3%. Also, 100% saturation doesn’t seem like a realistic goal in this generation, so yes, growth will eventually slow down.

But not this year, at least not to Cowen and Company‘s study that indicated that 41% of Internet users will increase their online spending this year.

Don’t despair or shutter your eCommerce store now, though. While they predict that 2011 will see only 8% growth for eCommerce in general, JupiterResearch says we’re not at the plateau yet. At that point, eCommerce will constitute about 6.6% of the total US retail market (still a ways to go to reach the 10-15% plateau). That translates to $171 billion in 2011.

Yes, JupiterResearch predicts that eCommerce will plateau at 10-15% of the total US retail market. They also predict that the market will grow 16% this year. So while eCommerce will certainly plateau someday, today is not that day.

Perhaps even more important, however, is their finding that online research will continue to drive offline sales. By 2011, the Internet will influence or drive almost half of all offline sales through online research or advertising.

I’m not sure whether to call eMarketer Daily or JupiterResearch “Chicken Little” here, but one thing’s for certain: the sky isn’t falling (or at least not as fast or as hard as they seem to think).