• by Tanya Gazdik , September 3, 2009

It's likely that the children and teenagers of today will conduct the majority of their shopping online, according to a report from Nielsen.

While online shopping accounts for a modest percentage of today's sales, it is growing rapidly. In 2008, online retail accounted for approximately 7% of total retail sales in the U.S., with 1.5% of consumer packaged goods (CPG) spending done on the Web, according to Nielsen's "Building Great Brands in the Digital Age: Guidelines for Developing Winning Strategies."

The company estimates that online CPG sales alone increased 25-30% between 2004 and 2008. Overall online sales are projected to increase almost 200% between 2008 and 2012, according to David Wiesenfeld, VP, brand advertiser solutions, online division at Nielsen.

From a marketing standpoint, the smaller/niche retailers can reap the benefits of an online presence. Consumers have far more control over what they are exposed to online versus offline. This offers smaller brands the opportunity to generate an online presence that is effectively larger than their big-brand counterparts are, while serving up compelling messages and undercutting leading brand prices -- all at the point of purchase, Wiesenfeld says.

"What is interesting to note, though, is that the online commercial challenge for leading consumer brands has less to do with the 'long tail' than with the collapse of physical structures that literally help distance leading brands from smaller brands offline," Wiesenfeld writes in the report. "It is not the number of brands available online that matters, but that there is less separation between them -- which levels the playing fields, creating a flatter, broader marketplace for everyday brands."

One example is the beauty category. Boutique retailers with fewer stores and lighter foot traffic than the large offline chains are as readily accessible on the Web as a Walmart or Target, which sometimes do not carry the leading offline beauty care brands on their Web sites.

Convenience, choice and value are the three main reasons that consumers shop online today. Online shopping redefines convenience and choice and equips consumers with unprecedented way to seek value, Wiesenfeld says.

Online is a simpler, faster, more hassle-free way to shop for frequently purchased products, and it offers more variety, which services like Peapod's "endless aisles" clearly demonstrate. While value is not the primary reason most consumers shop for "everyday" products online today, it will become increasingly important as e-commerce becomes more mainstream, Wiesenfeld says. Tools to rapidly compare product prices already exist and online coupon sites have become the rage in the down economy.