E-commerce is strong despite sluggish economy

San Jose Mercury News

WASHINGTON — Internet commerce continues its robust growth, defying a sluggish economy that’s teetering on recession, Google’s chief economist and several analysts said Friday.

Electronic commerce has grown about 22 percent in the past two years, said Hal Varian, the economist, who spoke at a forum on the state of the Internet economy at Google’s new Washington office. Ed Garrubbo, chairman of the Electronic Retailing Association, said online sales jumped 17 percent in the first quarter of this year.

“The lesson here is that the economic slowdown is not an Internet slowdown,” Varian said. “The Internet is looking pretty strong compared to other sectors.”

Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan tech think tank, predicted continued growth for online commerce as high-speed connections increase and “the core technologies are becoming faster and cheaper.”

“The absolute growth has been steady now for several years. The Internet economy is almost counter-recessional,” Atkinson said. He added that comparisons with past slowdowns are difficult because this is the first downturn in which online commerce has played such a big role.

Garrubbo said traditional retailers such as Saks are experiencing a boost in online sales while other retail sales in stores are leveling off. The falling dollar is also helping online businesses attract foreign customers.

Citing data from Forrester Research, he said 53 percent of all computer hardware and software sales take place online, along with 30 percent of all toys, video products and auto parts. One survey showed that two-thirds of all Internet users have bought products online.

The looming recession may actually contribute to e-commerce, Garrubbo said, because cautious consumers are doing more research and comparison shopping online before making a big purchase.