Although North American economic growth in most traditional categories has been stalled for the past year, e-commerce continues to show robust growth.
According to comScore's holiday 2002 e-commerce report, consumer e-commerce totaled $1.9 billion, a 19% increase over last year.
The two fastest-growing categories (Home and Garden, +78%; Furniture & Appliances, +75%) confirm that the robust market for new and resale homes over the past year is spilling over into other parts of the economy.
Why the growth in these categories amidst an overall weakening of the economy? Let's call it the "hunker in a bunker" era.
Pent-up demand for homes in the 28-to-40 age group has seemingly given way to actual home ownership. And whether it should be attributed to a decade of strong economic growth finally scaling back, the anxious times precipitated by the events of last September, or even just low interest rates, the Generation X group have finally found that they have not only the money but the time to focus on building up their neglected domestic infrastructures. Call it Cocooning 20 Years Later.
As with any retail trend, this one won't last forever. It's weird to see many home improvement shows are on TV these days. Home improvement is suddenly riveting. Sexy, almost. The boomers were right to be suspicious of us. Outwardly defiant, when push came to shove, the over-30 members of Gen X turned out mostly not to be slackers or revolutionaries. Rather, we're diligent. Boring, really. Surely this too will pass.
The future of online commerce is in many ways more impressive than the above growth numbers would suggest. There are only so many garden gnomes and dishwashers that people are going to buy online. Many consumers will compare prices, features, and reliability records online and then head down to the local big box store to make the final purchase. That's why travel will continue to be a leading consumer e-commerce category: buying a ticket (or an e-ticket) is just the sort of thing the Internet is suited for. Thus as consumers increasingly flock online to comparison shop, it's the portals, search engines, comparison shopping engines, and trustworthy topical "vortals" that will enjoy the fattest and least messy profits from facilitating consumers' research. Mega-sites like Yahoo and MSN, search leaders like Google, and shopping search technologies such as DealTime and Google's new "Froogle" all stand to benefit from this trend even if consumers ultimately decide to purchase items in-store.
If Internet commerce, or better yet, search and navigation, is your business, then be of good cheer. Maybe I'm high on the Nyquil and nog, but I could swear I can even see content making a comeback as a business model in 2003.
Happy cocooning! Or, er, should I say: happy hunkering.
December 26, 2002
Andrew Goodman is co-founder and Editor of Traffick.com, a popular guide to search engine and portal trends. He has published articles in publications such as Internet Markets, The Globe and Mail, and Yorkshire Post Magazine, and is regularly cited in business and technology publications such as Business Week. In 1999, Andrew left his burgeoning academic career in political theory and policy studies to found a private consultancy, Page Zero Media, which offers search engine marketing services and strategic advice to companies seeking an online presence.
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