Web retail sales to dodge effects of slowing economy

SAN FRANCISCO--Despite a slowing U.S. economy, online retail sales will continue to grow at double-digit rates for the next several years, but it will begin to take a turn toward maturity by 2012, according to new research from JupiterResearch.

U.S. online retail sales are expected to reach US$148 billion in 2008, up 19 percent from sales in 2007 and comprising about 6.4 percent of total retail sales. That figure will grow to US$166 billion in 2009 and US$215 billion by 2012, for a compounded annual growth rate of about 11 percent, according to JupiterResearch analyst Patti Freeman Evans.

In 2012, Web retail sales will account for 8 percent of total retail sales, according to JupiterResearch projections, but that percentage will top out at between 10 percent and 15 percent in the following years. The reason, Freeman Evans said, is the number of new online shoppers will have slowed by then and existing shoppers won't be adding to their carts.

She added that a weakened economy now and in the coming years will likely not effect e-commerce growth.

"Online is somewhat insulated," Freeman Evans said at an event here Thursday sponsored by PayPal, which is owned by eBay. "But the market will be a little dampened."

PayPal held a small gathering for online retailers to highlight Jupiter's research and emphasize the growth of its Web payment services. It plans to hold five small meetings across the country in the coming weeks for existing and prospective customers to discuss retail strategies in a tough economy. PayPal is also touting research that shows more people are adopting alternative online payment methods like its own.

In nine years, PayPal has amassed as many as 141 million customers for its online payment method. And an estimated 33 percent of Web shoppers who prefer alternative payment options use PayPal, and about 2 percent use Google Checkout, according to the research firm.

The picture is still rosy for online retailers.

Freeman Evans said more than half of online shopping categories are still growing at double-digit rates. For example, by 2012, as much as 37 percent of music will be sold online. More than 50 percent of consumer electronics will also be sold online by that time, too, according to JupiterResearch.

"By 2012, at least half of all retail purchases will be influenced or transacted online. Eight percent of retail sales will happen online by that time and the rest will be influenced" by the Web, said Freeman Evans.

This article was first published as a blog on CNET News.com.

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