Americans spent more online on clothing in 2006 than they did on computer hardware and software for the first time in history, according to the first part of “The State of Retailing Online 2007,” the tenth annual Shop.org study conducted by Forrester Research, which surveyed 170 retailers.
The report found the apparel, accessories and footwear category reached $18.3 billion in 2006 and is expected to hit $22.1 billion in 2007, when 10 percent of all clothing sales are expected to occur online, in part because of liberal shipping policies and new technologies that allow consumers to better “see” what they’re buying.
Computer hardware and software, long the frontrunner for non-travel online sales, moved into second place in 2006 at $17.2 billion; computer peripherals, which reached $1.5 billion in sales last year, were not included in the hardware and software category.
In third place was online sales of autos and auto parts ($16.7 billion), followed by home furnishings ($10 billion).
Nevertheless, in relative terms, consumers are reluctant to buy clothing online. In 2006, only 8% of all clothing purchases were made via the web, compared with 41% of computers, 21% of books and 15% of baby supplies.
Moreover, return rates for clothing bought online are about twice as high (14%) as those of other products bought online.
Total online sales, including travel, are expected to reach $259.1 billion in 2007, according to the Forrester research. That’s an increase of 18% from 2006. Sales excluding travel will reach $174.5 billion – about 7% of total retail sales in 2007.
The strong growth follows an impressive increase of 25 percent, to $219.9 billion, in 2006; excluding travel, online retail sales rose 29 percent, to $146.5 billion – 6% of total retail sales in 2006.
Additional findings from the report:
- 83% of surveyed retailers reported profitability
- 78 percent said they were more profitable than in 2005
- Profit as a percentage of revenue did not change because revenue and expenses also grew
Sources: Shop.org, New York Times, Associated Press