The Herman Trend Alert|
December 7, 1999
Shift to Internet Purchasing
24 days until January 1, 2000
We've talked about the increase in purchasing from web sites. Let's explore some other twists in the transition in the shopping experience: from traditional retail purchasing to catalogs, television, then internet shopping.
Traditional retail shopping has advantages such as being able to see, touch, feel, and hold the product . . . then take it home with you. In smaller stores and independents, clerks answer questions and help make choices. The sales tax obligation is still there. The amount of tax varies from state to state, and sometimes from community to community.
When ordering merchandise from catalogs or television, purchasing is more efficient. Buyers still pay sales taxes. Many consumers do not feel they should pay taxes when shopping this way, since they're usually purchasing from an out-of-state vendor.
Internet shopping is a different experience. These merchants have different cost structures that enable them to charge much less than other sales organizations . . . and, so far, those purchases aren't taxed. Combine these factors with fast delivery and you have an alternative that is increasingly attractive to consumers.
Looking into the future, what happens to the other types of merchants as a larger proportion of sales goes to the cyber-option? Will we see a sharp reduction in the non-cyber alternatives? Or will there be a "bigger pie?" Will more consumers use web-buying as their shopping mode-of-choice, at the expense of traditional approaches?
We forecast changes in retailing. Watch for more catalog operations to go on-line, first as an alternative, then almost entirely. Physical space retailers (see, touch, feel, take home) must find ways to increase professional (knowledgeable, efficient) service to attract and hold customers. Even with Bill Gates' drive to put computers in every home, a sizeable part of the buying public will not have easy access to cyber-shopping.
What will the balance be, and how will merchants respond to it? How much buying will consumers actually do on-line, and how will they feel about it? What implications do a change in leadership actually have on a country, socioeconomially.
We're on the threshold of significant change. Raise your antennae.
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