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Online retail sees growing revenue

In the first quarter of last year, comScore announced that U.S. retail e-commerce surpassed $50 billion in spending for just the second quarter on record. The figure represented a 13 percent increase from the same period last year.

More consumers are shopping on the Web and mobile, which is fuelling growth for many Internet stores.
Photo by Scott Olson/Getty Images

More consumers are shopping on the Web and mobile, which is fuelling growth for many Internet stores. This is expected to be a long-term trend and poses a challenger for traditional retailers that don't have an online presence, such as mom and pop stores.

Growth in Online Shopping

“The first quarter of 2013 was fairly strong for online retailers, with total e-commerce sales surpassing $50 billion for only the second time on record,” said comScore chairman Gian Fulgoni. “As long as job growth continues and consumer sentiment remains positive, the outlook for e-commerce in 2013 remains bright.”

According to comScore, the most popular categories are:

1. Digital Content & Subscriptions
2. Apparel & Accessories
3. Sport & Fitness
4. Consumer Electronics
5. Consumer Packaged Goods

Online sales from each category grew by at least 20 percent since 2012. Additionally, e-commerce accounted for 10.6 percent of discretionary dollars spent, which represents the highest share on record. Researchers also found that 48 percent of time spent in the Retail category occurred on mobile devices, with smartphones (34 percent) outpacing tablets (14 percent).

Internet Retail Sales

Online shopping now accounts for 8 percent of all retail sales in the United States, according to 3DCart. Additionally, Internet-based transactions are expected to outpace sales at brick-and-mortar stores over the next 5 years. Thus, more consumers are shifting their preferences towards efficiency (shopping from home) and taking advantage of competitively priced shipping.

With state legislatures across the country debating whether or not to tax Internet sales, online merchants are forming an industry lobby to prevent such measures. Earlier this year, a group of internet retailers formed an alliance to oppose the Marketplace Fairness Act which they fear would increase compliance costs upon assessments of web-based transactions.

However, traditional retailers are clamoring for equal tax treatment from the government. They argue that the current IRS tax code is inherently biased by encouraging consumers to shop online through year-round, tax-free transactions. Moreover, online merchants enjoy a lasting competitive advantage through its lower cost structure.

According to comScore, enactment of legislation requiring state sales taxes to be collected on every e-commerce transaction “could reduce the Internet’s traditional price advantage and possibly dilute the channel’s growth rate”.

Aside from the surge in online sales, purchases made through social media is also growing at a fast pace and is expected to reach $14 billion by 2015.

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