National merchants will dominate e-commerce, possibly accounting for close to 95% of all Internet retailing by 2003, according to a report from Forrester Research Inc. The findings are contrary to popular expectations, the Cambridge, MA-based research firm notes.
While offline, small and medium sized retailers account for half of all retail revenue, online, they are capturing less than 9%. Forrester points out that large, national companies have an edge in technology and brand recognition as well as in financial resources. The lack of brand recognition makes it difficult for local merchants to create advertising and portal deals. And the cost of building an effective e-commerce site can top $1 million.
Forrester surveyed 20 national and 30 local Internet marketers for the report, “Local Commerce Goes National.” Both groups see their online business doubling by 2002, growing from 8% to 17% of their total revenues, and their Web advertising rising to one third of their ad budgets.
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