More People Shop Online Globally, but E-Commerce Faces Challenges

It’s a good time to be Amazon.com or EBay, but it can be lonely at the top.

This year, shares of Amazon and EBay, two of the largest e-commerce companies in the U.S., have increased 35 percent and 59 percent, respectively. Relative newcomers, in the U.S. and elsewhere, are having a tough time elbowing in and turning a profit.

My colleagues Ari Levy and Danielle Kucera wrote that the U.S. e-commerce industry is the most frothy it’s been since 2000 — shortly before the dot-com bubble burst, taking Pets.com and Webvan with it. While online sales are expected to surge 45 percent to $327 billion in the U.S. in 2016, according to Forrester Research, buzzy Web-retail startups in the world’s biggest e-commerce market are having trouble justifying the high valuations that seemed to make sense a year ago.

Globally, online sales last year were estimated to be 690 billion euros ($884 billion), according to the Interactive Media in Retail Group, a U.K. online-retail trade organization. Growth in the largest markets will be at least 10 percent, the group reported. Taiwan’s economic officials estimated growth of 17 percent this year. And China, where e-commerce leaders such as Taobao.com are emerging, is growing at more than 130 percent, according to the U.K. trade group.

But in China, as in many other countries, running an e-tailer is not as rosy as the industry growth rate would suggest. The pressure on margins may be tougher in China than it is in the U.S. due to tight competition and low prices, the Economist reported. That’s not stopping some American companies from chasing the dream out East, where other contenders such as Best Buy have failed. Toys R Us said yesterday that it plans to open a retail website in China.

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