Online retailers saw a 24 percent increase in sales in 2004; growth through 2005 is projected to achieve another 22 percent. The findings were published in "The State of Retailing Online 8.0," an annual report published by Shop.org in conjunction with Forrester Research.

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A 24 percent growth rate outpaces traditional retail, which saw an increase of only seven percent. Last year, online accounted for 6.5 percent of total retail sales, up from 5.4 percent in 2003. In 2005, online sales are expected to account for 7.7 percent of total retail sales.

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Every category tracked in the study experienced growth. Health and beauty increased 58 percent. Sporting goods shot up 43 percent. Computer hardware and software tied auto and auto parts, both growing by 13 percent.

While consumer confidence in secure transactions may account for some of the growth in online sales, supply and demand takes a share of the credit. Retailers continue to optimize mechanisms in how they reach customers. Consumer demand is growing as the convenience of shopping online improves.

"On the demand side, we continue to see more new shoppers coming online," said Scott R. Silverman, executive director of Shop.org. "And the new shoppers that have been online continue to get more comfortable."

Search engine marketing traffic accounts for nearly half (43 percent) of new online retailers'. E-mails to house lists are seeing conversion rates of 4.3 percent.

Multi-channel retailers are benefiting from creating a seamless experience between on- and offline channels. Sixty-six percent of retailers surveyed provide printable coupons on their Web sites that can be redeemed in stores, up from 46 percent in 2003. Retailers are also enabling sales staff to place online orders for customers. This is the case with 53 percent of retailers, up from 34 percent in 2003.

"Retailers are integrating their systems and their channels, making the best of each channel available to their customers," said Silverman. "Making for a better shopping experience overall."

This article was adapted from ClickZ.com.