Accoring to Jupiter Media, the rate at which online sales are growing will drop to 9% by 2010. That growth rate is 25% now. Forrester Research says online book sales will rise 11% this year. Last year that rate was 40%.
An article in The New York Times contends that e-commerce sales are slowing in almost every category as internet purchases take up a larger percentage of overall retail sales and bricks-and-morter operations get better at drawing consumers to stores.
If the analysis is accurate, companies like Ebay (EBAY), Amazon (AMZN), and Dell (DELL) may be in for real trouble. And, firms like Expedia (EXPE) could watch their revenue growth drop to zero.
If a drop-off in the sharp growth of e-commerce continues, the company’s with stocks that have run up the most are probably those at greatest risk. Dell is at its 52-week high. Amazon is up over 100% in the last year. Expedia is up over 60%.
There could be some collateral damage, and much of that may happen at Google (GOOG). E-commerce operators use the huge search site to place text ads that send them customers. If the overall trend of purchasing goods and service on the internet is slowing, so will the need for this kind of marketing..
E-commerce growth had to slow sometime, but most investors did not think its would happen so soon.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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