In Case You Didn't Know: Internet Sales Can't Grow At Ridiculous Rates Forever

from the seriously? dept

The NY Times wants to make a big deal out of the fact that e-commerce growth rates may be slowing, but that hardly seems like much of a story. Note that they’re not saying internet growth is disappearing — just that the rate of growth is slowing. That’s to be expected of any market once it goes mainstream, because you simply cannot maintain the same growth rate on such a large base. You hit diminishing returns. Of course, that’s a concept that’s been around for ages, so it hardly seems newsworthy to suggest that growth rates may be starting to slow — even as tremendous growth remains. But, these days, it’s fun for the press to poke at the internet. However, if the best they can do is to say that growth rates are hitting their expected diminishing returns, it hardly seems like a real problem. Of course, that didn’t stop the headline writer from suggesting this was a sign that people were tiring of buying on the internet — even if the data doesn’t support that conclusion at all.

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Comments on “In Case You Didn't Know: Internet Sales Can't Grow At Ridiculous Rates Forever”

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Swag Valance says:

OMG -- where did all the money go!

This just in off the newswire…

The invention of online shopping did not, I repeat, did not apparently create a global surplus of disposable income for people to buy more crap online than they would ever buy offline. This shocking revelation has many online retailers shaking their heads, challenging their assumptions about Internet retailing.

CEOs across the Internet have reacted to this news with stunned disbelief. Said CEO, Wink Martins, “I thought because we built a Web site, suddenly billions of new dollars would flow into the retail economy that previously did not exist! How could we know that building a Web site didn’t mean that consumers wouldn’t just suddenly have more cash to spend than they previously had. We feel robbed.”

Absolutely... says:

I mean, seriously..

Afterwards, Wink Martins, through a spokesperson with a thick manila folder marked “LAW STUFF 4 JUDGE”, announced they would be forming a coalition of Internet companies with the express purpose of filing lawsuits against users who illegally frequent traditional stores, to the detriment of online retailers. “The days of users flocking to and fro in these ‘malls’ and ‘shopping centers’ is over – our methods will pave the way for all online retailers to utilize DSM – Digital Sales Management – which will allow any online retailer to track their users offline shopping habits and report them. We will soon have a website up for the express purpose of allowing our users to avoid costly lawsuits and simply provide us with their employer’s account information – they won’t even have to sign their paychecks over, they’ll just come to us!” Clapping with glee, horns suddenly grew from his head and his feet turned into cloven hooves before his eyes went wide and he leapt into a nearby limo.

Overcast says:

I was laughing at the ‘Sun’ on the tabloid shelf at the store this weekend. Something about the end of the world…

Then I commented to the wife… I said – in all seriousness, I wonder if more in there is actually true than on Network News and the Newspapers.

It kinda strikes me – I can actually question that now. i’m not talking the ‘shock’ stories but all the other blah, blah.. heck, I’m curious what the REAL ratio is – not just what they say is true.

Joe Smith says:

relative vs. absolute

They are talking about relative growth. If you are coming off a low base you can have very large relative growth rates. Even as the relative growth rates slow down (percentage increase year over year), the absolute growth rate (absolute increase in dollars spent year over year can hold steady or increase).

We get into this problem with comments on China where, for example, someone will say: the economy is slowing down because last year it grew 10% and this year it will only grow 9% forgetting that the 9% growth is compounded with the earlier 10% and represents about the same absolute dollar increase ( since .09 * 1.10 is very close to 0.1)

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