Study: E-tailers to grab $330 billion in 2010

U.S. online retail sales will almost double from $172 billion in 2005 to $329 billion in 2010, according to a new report from Forrester Research.

The 14 percent compound annual growth will be fueled by a shift in businesses' approach toward the Web. Retailers now view the Net as a tool to improve customer service and retention rather than as a low-cost sales channel, Forrester said.

"Businesses are debating their online strategy. Many believe they became too focused on sales. Now they're looking at their Web sites as a way to drive in-store traffic and increase their engagement with customers," Forrester researcher Carrie Johnson said in a statement.

As part of the attempt to refurbish its image, San Francisco-based clothing giant The Gap is currently redesigning its Web site to offer an easier checkout process. Meanwhile, Cambridge, Mass., start-up Allurent is targeting online retailers that want to enable consumers to easily revise an order at any stage of checkout within a single online form.

Travel will continue to remain the top category, with revenue climbing to $119 billion in 2010, almost a 90 percent increase over $63 billion grossed in 2005. Revenue from online sales of general merchandise in 2005 will cross $100 billion, the data researcher said.

Categories expected to see a gain in the coming years include health and beauty products--predicted to grow at an annual rate of 22 percent--and small appliances. That category should see 29 percent of its sales move online by the end of the decade, as today's Internet-saturated youth begin to get married and attend weddings, Forrester predicted.