I happened across an interesting article Sunday in NYT called Online Sales Loose Steam which reports that overall Internet sales over the last year have been slowing down compared to past years where we have seen annual eCommerce sales increase as much as 25%. Experts and analysts reported that the Online sales growth is expected to continue slowing possibly through the next decade. Here’s a snippet from the article over at New York Times:

The slowdown is a result of several forces. Sales on the Internet are expected to reach $116 billion this year, or 5 percent of all retail sales, making it harder to maintain the same high growth rates. At the same time, consumers seem to be experiencing Internet fatigue and are changing their buying habits.

The rest of the articles goes into some interesting statistics and a pretty decent analysis where they reviewed professionals opinions, feedback and reports from real Online and Offline merchants and several research companies including Forrester and Jupiter. My favorite part of the article is the insight by Nancy F. Koehn, a professor at Harvard Business School where she says the following:

The leveling off of eCommerce reflected the practical and psychological limitations of shopping online. She said that as physical stores have made the in-person buying experience more pleasurable, online stores have continued to give shoppers a blasé experience. In addition, online shopping, because it involves a computer, feels like work. Online shopping is running into practical problems, too. For one, online sellers have been steadily raising their shipping fees to bolster profits or make up for their low prices.

The drop in sales is not something that has been reported across the board, however slow growth has been reported in some of the most popular Online industries including books, tickets, office supplies, health and beauty products, computer supplies, pet supplies, music and videos, appliances, sporting goods and auto parts.

Many of the selling categories listed above are extremely competitive on the Internet and reinforce the fact that to be successful selling Online today, it is more important than ever to have a niche product or specialty items to populate your eCommerce catalog with. I think the influence that eCommerce has over shoppers who actually buy Offline will eventually level off and we will continue to see steady growth for Online sales (probably not as high as 25% like we have seen in past years).

Update: This article prompted several reactions among bloggers and eCommerce experts who disagreed with the main point or thought it was not as accurate and exaggerated. I think just because the Internet is beginning to influence Offline purchases it doesn’t neccessarily mean that ALL markets are loosing steam and that this is possibly the end of selling online or the retail industry. There are plenty of other factors like phone orders and fax purchases and just because the “Online” sales are slowing doesn’t mean RETAIL sales are slowing. I think there are going to be less and less opportunities in extremely saturated industries as this trend continues. I agree that the article could have gone into more detail about what this slow time means for the future, really, but overall it was a good thing to report in my opinion.

Here’s some reactions/opinions from other bloggers and web professionals about Sundays article:

• Slate.com – Bogus Trend Story of the Day: Online sales losing “steam.”
• eCommerceInsights.com – “Online Sales Lose Steam”…let the games begin!
• Shop.org – Losing Steam or Part of a Bigger Story?