Americans in 2006 spent more online on clothing than they did on computers for the first time in history, according to a just released report. Apparel, accessories and footwear category reached $18.3 billion in 2006 and is expected to hit $22.1 billion in 2007. This year, 10 percent of all clothing sales are expected to occur online.

The report, The State of Retailing Online 2007, is a study of 170 retailers by the Internet retailer association Shop.org conducted by Forrester Research, Inc., a technology and market research company.

The report suggests that the apparel and accessories category has experienced strong sales because of an influx of new companies and liberal shipping policies such as free shipping on returns and exchanges. In addition, apparel and accessories retailers are integrating new technologies onto their sites including rich imaging, where customers can zoom and rotate merchandise or see the item in different colors before buying, all of which eases the mind of a customer who is hesitant to purchase apparel online.

“Apparel retailers have overcome a number of hurdles to encourage shoppers to buy clothing and accessories online,” said Scott Silverman, executive director of Shop.org. “Retailers are doing such a great job online that in some cases it’s easier to find and buy clothing on the Web than it is in a store.” 

Computer hardware and software, long the frontrunner for non-travel online sales, moved into second place in 2006 at $17.2 billion, followed by sales of autos and auto parts ($16.7 billion) and home furnishings ($10 billion).

According to the report, 2007 online sales (including travel) are expected to rise 18 percent to $259.1 billion. Sales excluding travel will reach $174.5 billion. This strong growth will come off of an impressive performance in 2006. Online sales last year rose 25 percent to $219.9 billion. Excluding travel, online retail sales rose 29 percent to $146.5 billion, representing six percent of total retail sales in 2006.

“As consumers flood the web to purchase merchandise and research products, online retail is moving full speed ahead,” said Sucharita Mulpuru, Forrester Research senior analyst and lead author of the report. “This strong growth is an indicator that online retail is years away from reaching a point of saturation.”

Another sign that e-commerce has come of age is that profitability throughout the sector has stabilized, according to the report. Eighty-three percent of respondents to the survey reported profitability and 78 percent said they were more profitable than 2005. Profit as a percentage of revenue did not change, the report notes, because revenue and expenses grew as well.

The second part of the study, which will examine tactics that online retailers found most successful and site features that resonated most with online consumers, will be released in September at Shop.org’s Annual Summit.

JCK