Internet global supermarket expands in recession

Paris: The Internet global supermarkets are flourishing as people are looking for other alternatives to do business in the times of recession, according to the report by OECD forecasts. This expansion will continue as mobile phone use explodes, the Chinese get involved and advertisers jump in, reports economic times.

The report found that the financial crisis had breathed new life into electronic commerce, with sales rising in Europe, the United States and China at a time when the store-based retail sector struggles as consumers' disposable income shrivels. "The financial and economic crisis appears to be giving a e-commerce a boost as consumers search for ways to reduce expenditures by purchasing items online. The savings can be substantial," the OECD said.

The report cited a study showing that shoppers in Britain, Germany and France can save 17 percent by buying electronics goods, DVDs and clothing on online trading platforms rather than in physical stores.While in the United States on-line sales for 80 retailers rose an average of 11 percent in the first quarter of the year

One site, Craigslist, is forecast to report sales of 100 million dollars this year, a 23 percent increase from 2008. Another platform, Amazon, had net sales of 177 million dollars in the first quarter alone, up 24 percent from the first quarter 2008. The OECD cites a study by the Forrester research group predicting that western European consumers will buy 123.1 billion euros' worth of goods online by 2014, for an average annual growth rate of 9.6 percent.

But the e-trade revolution is being held back by hidden frontiers, ranging from concerns over privacy of personal information, language problems, delivery costs and taxation and regulation barriers. But the OECD warned that the future of e-commerce is not entirely secure, maintaining that its fate "depends for a large part on the level of confidence that consumers have in on-line shopping." It noted that half the cross-border complaints and disputes filed with the European Consumer Center Network stemmed from purchases made over the Internet. "Delivery problems and dissatisfaction with the products purchased were the leading reasons for the complaints, accounting for 75 percent of the total," the OECD said.

While the Internet may have made it easier to buy products from foreign businesses, consumers have shown themselves to be reluctant to do so, according to the OECD, which cited language barriers, higher shipping costs, regulatory barriers and scams and misleading practices as key constraints. Last year 33 percent of EU consumers purchased products online but only 7.0 percent bought goods from another country, the report said.

The study found that most countries, apart from the United States, do not have specific regulations to protect the privacy of children. It said many online retailers ask consumers to confirm their age simply by ticking a box, with no follow-up measures to ensure that the information is accurate. Another area of growing concern for the sector, according to the OECD, is the use of behavioral techniques that track a consumer's purchasing habits in order to tailor advertising to his or her interest.

But there is little doubt about the economic impact of online advertising. A recent study cited by the OECD found that the contribution to economic activity of online advertising amounts to 300 billion dollars in the United States. The U.S. online advertising sector directly employs more than 1.2 million people.