NEW YORK (CNN/Money) - Online retail sales are expected to grow 27 percent to $144 billion in 2004, but the pace of growth marks a slowdown from last year's robust 51 percent increase, according to an annual industry report Tuesday.
At the same time, total online sales in 2004 are forecast to account for about 6.6 percent of total retail sales, up from 5.4 percent a year ago, according to the latest Shop.org study entitled "The State of Retailing Online 7.0."
Among the top-performing categories, apparel sales are forecast to increase 42 percent, sales of flowers, cards and gifts should grow 41 percent, and sales of health and beauty products are expected to increase 40 percent, the report said.
"Consumers continue to expand their online buying into new product categories as they become more comfortable shopping online," said Carrie Johnson, senior analyst with Forrester Research which conducted the study for Shop.org. "This mainstreaming of the Web into consumers' lives not only fuels online sales, but also creates new opportunities for retailers to successfully grow their online businesses."
At least one industry analyst said the slower pace of growth is to be expected.
"First of all, this sector is coming off a much larger base. So the decrease in growth isn't that surprising. What's important is that it still remains healthy," said Vikram Sehgal, senior analyst with Jupiter Research.
"Secondly, some online categories are maturing, such as apparel, personal computers and software," he added.
The Shop.org report said total online sales last year, excluding travel, grew 34 percent over 2002 to $72 billion in 2003.
The study also found that a greater percentage of e-tailers -- 79 percent -- were profitable in 2003, up from 70 percent in 2002.
"As a result, brick-and-mortar retailers are bolstering efforts to integrate channels, and they have also gotten serious about cross-promoting channels," the study said.
"Retailers understand that, in a multi-channel environment, each channel has unique strengths and benefits," Scott Silverman, Shop.org executive director, said in a statement. "We are beginning to see retailers crack the code of maximizing each channel so that the whole is greater than the sum of its parts."