SILVER SPRINGS, Md. (July 20, 1999) — What kind of an impact is the Internet having on retail sales and distribution in North America?

Revenue from online transactions in Canada and the U.S. will top $36 billion US by the end of the year, according to a study of 328 retailers who sell products via the Internet.

That’s a projected growth rate of 145% over 1998, when total online revenues reached $14.9 billion and represented 0.5% of all retail sales. Online orders in 1998 were up 200% over 1997 and the number of online shoppers was up 300%.

The majority of the online sales revenue is being generated by retailers with traditional brick-and-mortar storefronts, call centres, and catalog operations.

“Most people think e-commerce is mainly being done by Web-only businesses, but 62% of the $14.9 billion (U.S.) of online revenues in 1998 were from retailers who had businesses that predated the Web,” said David Pecaut, senior vice-president of The Boston Consulting Group, which conducted the study.

Pecault said established retailers are a growing force behind the continued rapid growth of online retail because they have the advantage of an existing brand and infrastructure, and are more recognizable than online-only competitors in some areas.

Online-only retailers like Amazon.com are making strides, however, with aggressive online and offline marketing and advertising campaigns to build their own recognizable brands.

The study said the most successful companies doing business online develop relationships of trust with customers to overcome inhibitions about online shopping; “imprint” new customers by becoming their first point of reference and creating a sense of comfort that can translate into customer loyalty; exploit the connectivity of the Web by leveraging affiliate programs and relationships that drive customers to their site; and provide end-to-end customer service throughout the purchasing cycle — from order-taking to delivery to merchandise returns and billing.

The study was commissioned by Shop.org, a trade association of retailers conducting online transactions.