Forums: Discussions for entrepreneurs and small business.

 

http://www.nytimes.com/2007/06/17/technology/17ecom.html?ei= 5090&en=1fa221b3ec3bb4d9&ex=1339732800&partner=r ssuserland&emc=rss&pagewanted=print

[Quote=DrudgeReport]NYT: INTERNET SALES IN `DRAMATIC SLOWDOWN`
Sat Jun 16 2007 12:46:20 ET

Since the inception of the Web, online commerce has enjoyed hypergrowth, with annual sales increasing more than 25 percent overall, and far more rapidly in many categories. But in the last year, growth has slowed sharply in major sectors like books, tickets and office supplies, the NEW YORK TIMES will report on Sunday, newsroom sources tell the DRUDGE REPORT.

In Page One leads, the paper claims: "Growth in online sales has dropped dramatically in such diverse categories as health and beauty products, computer peripherals and pet supplies. Analysts say it is a turning point and growth will continue to slow through the decade."

Developing...[/quote]

Holy Cowpie, Batman ... What now  ...???

thanks for posting this, blondieblue! really relevant and important stuff - i read the NYTimes article and it kind of sounds like the billions of dollars of sales will continue to grow in volume, just not as fast. it had to slow at some point, right?

when you say, "what now???", how are you assuming this will affect you?

rich


-------------------------

Rich Sloan , Co-Founder, Chief Startupologist, StartupNation

There`s an interesting concept called "baseline budgeting." It essentially uses a "rate of growth" as a standard.

One way to budget is that if you sell $100 in Year1, $150 in Y2, and $300 in Y3, you go BACK and examine your rate of growth and say, "Wow! That was cool!"

But baseline budgeting means you START with a percentage of expected growth, then "assume" it`s a fact of nature. So you say, "I have a 50% per year rate of growth. That means in Year 4, based on $300 in year 2, I (in fact) will make $450 in sales.

Suppose you only make $400 in sales? Then you "could say" that your rate of growth has "dropped sharply." Does that mean you`re going broke?

The Internet, and secure payment methods has been very new. Over the past few years that new-ness has worn off, and e-commerce is starting to be a standard way of life. It makes sense that if only 1% of the entire population were willing to risk e-commerce "back then," there would be a huge potential for growth.

But suppose we now have 90% of the population willing to buy online. Although the "rate of growth" might slow way down, the AMOUNT of money moving across the Web would be massive. Where are the figures on that?

Suppose we`ve now reached $100-bazillion in annual transactions, and the "rate of growth" slows to 1%. That`s still A Bazillion Dollars *growth* per year!

Dam statistics - they can be so misleading. It is natural for YOY revenue growth to slow down at some point. Just think about it, a billion dollars of revenue growth was a big deal in the mid 1990`s. Today a billion dollars of added revenue isn`t that big of a deal, but it still a billion dollars.

I would rather be in an industry who`s growth is declining than in a industry who`s revenues are declining like the New York Times, and they are doing better than most newspapers!