The Internet has created a new economic ecosystem, the e-commerce marketplace, and it has become the virtual

main street of the world. Providing a quick and convenient way of exchanging goods and services both regionally and globally, e-commerce has boomed. Today, e-commerce has grown into a huge industry with US online retail generating $175B in revenues in 2007, [1] with consumer-driven (B2C) online transactions impacting industries from travel services to consumer electronics, from books and media distribution to sports & fitness. With more than 70% of Americans using the Internet on a daily basis for private and/or business use and the rest of the world also beginning to catch on, e-commerce's global growth curve is not likely to taper off anytime soon. However, the US recession has taken its toll on online sales. Although early 2008 estimates by Forrester Research were very strong with 2008 revenues upwards of $204B (a 17% growth rate), [2] 2008 holiday sales showed the first decrease in the last 7 years. Research by ComScore shows sales declining by 1% for the first 49 days of the holiday season.[3] In the last decade, many startup e-commerce companies have rapidly stolen market share from traditional retailers and service providers, pressuring these established traditional players to deploy their own commerce websites or to alter company strategy in retaliation. This effect is most pronounced in travel services and consumer electronics. According to comScore, online leisure travel bookings reached about $51B in 2005, or 44% of all online sales, which were around $122B in the same year. Roughly 30% of all travel bookings currently occur online. Consumer electronics, which includes the purchase of digital cameras, mobile phones, and home PC's, accounted for nearly $26B of worldwide e-commerce sales occurring in 2006, according to the NPD Group. As traditional brick and mortar firms continue to lose market share to e-commerce players, they will likely see continued declines in their revenues, operating margins, and profits. It is important to note that most e-commerce players are at a competitive advantage to retailers. They have lower operating expenses and better inventory management due to operating in a virtual commerce environment. For example,Amazon.com (AMZN) has revenue per employee of nearly $850k while its retail counterpart, Best Buy (BBY), generates revenue per employee of only $270k. Clearly, ecommerce vendors will have the most to gain if they successfully disrupt retail customer acquisition, disintermediate distributors/resellers, and under-price retail establishments. As a consequence of ecommerce vendor gains, financial transaction processors and parcel shipping companies are among ancillary vendors who will gain.

2005-2006: E-commerce continues to seize market share from traditional retailers in the US.

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There are several k=E-commerce Driey drivers the growth of e-commerce

Differentiation vs. Click-and-Mortars

Many e-commerce websites have established their leadership positions through low prices, high customer satisfaction, and convenient interfaces--but that position is becoming less and less unique. The largest retailers, such as Wal-Mart, Target, and Best Buy are pressing harder to gain market share online. The inroads the click-and-mortar retailers have been making is evident in recent come data, which shows the unique user traffic at the aforementioned sites increasing at greater year-over-year rates vs. pure ecommerce players. Those pure play e-tailers that develop and deploy the most unique web technologies to enhance consumer experiences and keep prices competitive will be in the best position to ward, off the clickand-mortar convoy.

Internet Penetration and Emerging Markets

Global Internet penetration rates have an enormous impact on e-commerce growth rates. Currently, more than 30.2% of the world has access to the internet, and hence, e-commerce. Reduced Internet surfing charges, Internet technology development covering expanded bandwidth, and increased speeds & reliability could make e-commerce available to a large pool of emerging market consumers. In India, only about 60 million (or 5.2%) of a total 1 billion person population currently have access to the internet. In China, the internet penetration rate is now at 29% as of June 2010. The companies that are able to gain significant traction first in emerging markets will be at great advantage to competitors. India will be booming country for eCommerce Business models, the country already reported 12% growth in eCommerce retail business year in financial year 2010 - 2011, India's leading ecommerce consulting company, chitrangana.com is assuming double digit growth in Asian countries including India in FY 20122013

Who Stands to Gain?

Online Travel Services
Expedia (EXPE) and Hotels.com are among many successful online travel service providers who stand to gain the most from recent growth trends. These players focus on travel-related transactions for airline seats, hotel rooms, car rentals, cruises, tours, and a host of other services. Travelzoo is a smaller player that has taken a novel approach to selling travel packages.

Online Retail
Overstock.com (OSTK) and Amazon.com (AMZN), two of the more successful online retailers, should continue to do well because of their consumer electronics focus.

Consumer Electronics
Sony (SNE) and Philips Electronics are among the leading consumer electronics manufacturers benefiting from an increase in e-commerce consumer electronics sales. For these companies, internet presence increases the visibility, easy availability and volume sales of their consumer electronics products.

Financial Transaction Services

EBS , EBay/PayPal and Authorize.net are examples of two leading financial transaction processors that get a cut every time you make a online purchase using their processing platform. More than 175 thousand merchants use Authorize.net (ANET) to help consumers accept credit cards and electronic check payments online. As more merchants move online, these types of

Travel Industry
Travel service companies, such as airlines, hotels, cruise ships, and rental car companies, also benefit from e-commerce intermediaries selling their products more quickly and easily than was previously possible and to a wider consumer base.

Shipping
FedEx (FDX) and United Parcel Service (UPS), two of the major shipping company players, are responsible for shipping the majority of products that are purchased online by consumers. As consumers continue to buy more online, these companies will see demand for their shipping services rise.

E-commerce Software
Many companies interested in selling products and services through the Internet choose to contract the construction and operation of their e-commerce platforms to third-party vendors. Some of these companies, such as Volusion eCommerce, GSI Commerce (GSIC), Web Cube and Digital River (DRIV) offer comprehensive, integrated packages that include software, web-hosting, order fulfillment and distribution and online marketing. Other firms offer more limited services such as Ariba (ARBA) and Akamai Technologies (AKAM). These two companies are e-commerce software vendors that make money selling software for e-commerce applications. All of these e-commerce service providers stand to gain as ecommerce traffic accelerates. Facebook also uses Akamai.

Traditional retailers like Gap are scrambling to keep up with the e-commerce trend, offering online catalog shopping in addition to traditional stores.

Web Analytics
One interesting niche of e-commerce services is the area of "web-analytics". These tools provide the management of online shops and all kind of e-commerce platforms a great inside of what happens on their websites. In particular they allow them to run real-time experiments with their advertising and marketing, to allow them to rapidly optimise their sales pipeline. Not only can they tell when sales improve, but they can also see which adverts brought those sales, and the routes the customers took through the e-commerce site to get there. Two major players are Omniture (OMTR) and Visual Sciences (VSCN) (former WebSideStory). One question for the future is how such niche players will compete with business analytic/intelligence solutions like SAS. They will also need to keep an eye on Google (GOOG), who have their own Google

Analytics software, which they provide for free to customers of their advertising products....

Who Stands to Lose?

Traditional Retail
Circuit City Stores (CC) and Best Buy (BBY) are prime examples of traditional retailers that have been losing market share to e-commerce startups over the last decade. These firms are now working aggressively to create an online presence for themselves in an attempt to halt earlier losses. In fact, with the added pressure of the recession, Circuit City filed for bankruptcy and is closing all of its stores. Specialty retailers like Zale (ZLC) have also faced increased competition from internet company sites.

Direct Retail Marketing

CDW (CDWC) and Systemax (SYX) are direct marketers of consumer electronics. Both will see business decline if the revenue distribution of consumer electronics sales continues to shift to online vendors. As more businesses buy from online intermediaries, the direct marketers' services are increasingly being bypassed. No body loss, it is a gain gain