Online sales still represent about 2 percent of total retails sales. So there's a lot more room to grow.

Online sales still represent about 2 percent of total retails sales. So there's a lot more room to grow,

Online sales are growing at a healthy clip, even though sales may have pulled back somewhat from the robust pace seen earlier this year.

Today, to compete anywhere, you have to be everywhere. Wal-Mart and Target have joined Amazon and eBay as the most heavily trafficked e-commerce Web sites, and chain retailers account for about 40% of online sales, compared to just over 25% for pure-play Internet retailers.

Online retailers were very successful in attracting early holiday shoppers by offering incentives such as free shipping and discounts. However low prices may end up hurting Web merchants' profit margins in the long run.

While the number of new Internet users in the US and the total number of online buyers are both growing at single digit rates, online sales are experiencing double-digit increases. Credit goes to baby boomers who are increasing their online spending and a cadre of digitally literate young adults who are replacing older Internet shoppers in the e-commerce marketplace. These demographic forces — coupled with the spread of broadband access — are changing the way people shop online and how Web merchants market to them.