This Week, Industry Snapshot Looks at
Non-Store Retail

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Dell Computer Corporation

Lillian Vernon
Corporation

Wal-Mart Stores, Inc.

Spiegel, Inc.

Netscape Communications
Corporation

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This Week's Industry Snapshot

As of yet, the grand projections for widespread, high volume Internet commerce have not materialized. Last year total sales over the Internet were roughly $500 million. While this was double the amount generated in 1995, if you attempted to rank the Internet as a retailer according to total sales it would qualify as an "also ran." This newly incorporated business "Internet Inc." wouldn't even make the list of top 100 merchants in the US.

There is enormous divergence in the Internet commerce statistics touted by consulting firms, with regard to both past numbers and projections. This is largely due to one damning characteristic surrounding the compilation of net commerce information. Most analysts include only the transactions that are actually carried out on the Internet; but the simple fact is that many consumers go about researching their purchases online but transact their orders by more traditional means. A CommerceNet/Nielson survey in March found that 53% of Internet users in the United States and Canada had used the Internet to reach a decision on a purchase, however, only 15% actually pulled the trigger (i.e. forked over the credit card digits). That same study revealed that 73% of Internet users had used the web for shopping in one form or another in the month preceding the study. More bleak statistics come from International Data Corp.'s (IDC) web based (self-selecting) study conducted from November 1996 to January 1997 in which nearly 66% of 1,052 respondents (90% from the US) stated outright that they did not plan to buy products over the Internet. On the macro level, Jupiter Communications estimates that in 1996 the total number of households with access to the Internet worldwide amounted to 23.4 million. In addition, Jupiter estimates that by the year 2000 over 66 million households will be "on the net." Other firms estimate that the number could grow to more mind boggling proportions, like 230 million households. Ever the spoiler, the more conservative IDC estimates that by the year 2000, just over 46 million Americans will be buying online (about 20 million American households).

While it is always dangerous to make projections based solely upon historical growth rates it is important to note that the Internet itself has been around for more than a quarter of a century, and despite the wrangling over future numbers there is a broad consensus that it has historically been doubling in size (as reflected in user numbers) over the same period. This doubling went relatively unnoticed for quite a stretch, finally bursting onto the scene and into the public consciousness by means of mass-media over four years ago. As many a "miraculous" compounding story can relate, the beginning is always boring and doesn't hold your attention, but just wait, the excitement kicks in rather late in the game. Despite the fact that the game may only be entering the second quarter, the excitement is already beginning to mount. Taking this simple doubling model and extrapolating it to revenue projections means that total Internet sales will grow from $500 million in 1996 to $4 billion by the end of 1999. Consistent with this elaborate, complicated approach is a study conducted by Cowles/Simba Information of Stamford Connecticut which released its findings in January stating that Internet sales would exceed $4 billion in the year 2000, with a total of $733.1 million generated in 1996. Ultimately a simple truth holds sway, Internet commerce is growing bigger, in tandem with overall usage.

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