Online retail sales are set to hit around £100 billion by 2002, but only a handful of today’s Net contenders will reap the rewards.

According to an in depth study by research company Giga Information Group, business-to-consumer sales over the Internet will increase from around £16.5
million in 1999 to £100 billion in 2002.

But the rate at which current retailers are burning through their cash and their extremely limited capital reserves means the majority are unlikely to survive the industry-wide shakeout.

Survivors, however, will be rewarded with a permanent share of future windfalls, gobbling £26.5 billion of overall revenues in 2002.

Giga predicts it will be the multi-channel retailers that will end up inheriting the earth. Vendors flogging their wares over the Internet, in stores, and through mail order catalogues will account for the majority of Web sales by 2002.

The report concludes that consumers will increasingly use the Internet for product research but that actual sales will continue to be dominated by high street stores where customers can touch real life products and whisk them home at once.

Click-and-mortar companies are ideally placed to exploit this trend, by combining marketplaces.

Last year more than three quarters of business to consumer sales were in just five industries: computers and computer equipment, travel, share dealing, auctions, and books and music. This will be reduced to around 50% by 2002.

Emerging categories include car sales, groceries, toys, gifts, insurance, house sales, and government. Giga predicts that ultimately online sales of cars and groceries will exceed those for online travel and computer sales.