US online sales will rise to $204 billion in 2008

Online sales in the US will climb by 17% to $204 billion in 2008 despite struggling economy. According to The State of Retailing Online 2008, the annual Shop.org study conducted by Forrester Research. Apparel ($26.6 billion), computers ($23.9 billion), and autos ($19.3 billion) will be the largest three sales categories.

Online retailers report that search engine marketing continues to be the most effective way to reach new customers, citing 35% of sales coming from that initiative. As a result, nearly all online retailers surveyed (90%) use pay-for-performance search placement, and 79% said they will make this tactic an even greater priority this year. Companies are also using offline marketing tactics to drive customers to the web, with catalogs and other direct mail pieces taking priority over methods like TV and newspaper advertising.

According to the survey, American retailers are eager to experiment with social computing initiatives to attract customers – 65% and 55% of retailers respectively said that social network advertisements and widgets would be categories of increased focus this year. However, social networking efforts to this point have been considered more effective for brand-building and less proven for driving revenue or sales conversion.

US online retail is projected to grow to $335 billion by 2012 from $175 billion in 2007, according to Forrester estimation. Business-to-consumer (B2C) eCommerce continues its double-digit year-over-year growth rate, in part because sales are shifting away from stores and in part because online shoppers are less sensitive to adverse economic conditions than the average US consumer.