Over the past six years, the growth of Internet retailing has resulted in dramatic challenges for existing retailers. Traditional channels of distribution have been challenged by the Internet's ability to offer products to distant consumers, resulting in increased competition in both product range and price. The pressure to enter this competitive market has resulted in high expenditure by potential and existing e-tailers attempting to achieve online sales. However to date, use of the Internet for retail purchases lags far behind more traditional channels of distribution. Despite high levels of Internet use in Asia, uptake of online shopping has been much higher in the United States, and Internet retailing in both the U. S. and the Asia Pacific is marked more by high profile failures than by successes. This study analyses reasons for the limited success of online shopping, particularly in Australia and Hong Kong, examines whether there were warning signs that Internet shopping would not take off, and considers the implications for existing or potential e-tailers in the Asia-Pacific.