The Trouble with the Trouble with Online Sales

I’m having trouble buying an argument in today’s Times that online sales are somehow in trouble.

Sure, sales won’t grow 25% into perpetuity. But is that really a surprise? At that “historical” (a term I used advisedly) growth rate, the doubling period for online sales isn’t even three years. With Internet sales already accounting for 5% of all retail sales in the U.S. that would but us at 10% (all else being equal) in 2010, 20% three years later, and almost half the U.S. retail market in 2013.

Put differently, it’s no surprise sales is slowing. The law of large numbers still holds — always has, alway will. But the raw revenue numbers are still gigantic, with online commerce adding more incremental revenue this year than was the entire e-commerce market in 1998-1999.

Does it have anything to do, however, with people balking at buying online? You have got to be kidding.


  1. I love getting my socks delivered for free, but amazon’s net margins (1.78% latest year data) are less than a supermarket’s (both wholefoods (3.6%) and safeway (2.2%) ), and its gross revenue is about a quarter of safeway’s, and just under 2x wholefoods’.
    I don’t have to tell you how notoriously difficult the supermarket business is.
    Even wholefoods’ rev growth (19.3%) compares favorably with amazon’s (26.2%). Maybe if wholefoods started giving away free milk they could goose their gross.
    I think the article is a valuation warning in disguise, but you never know with the NYT Technology section: one part wall street journal, one part book review :)

  2. The article said something about people finding offline shopping more convenient. Offline shopping is many things, but convenience is not the first word that comes to mind.
    Also, the article makes no mention of the great strides leading online retailers have made in breaking down the last remaining obstacles. For example, Zappos has always offered free shipping both ways, but now offers free overnight shipping (not sure if it’s universal or only certain customers).