RealTime IT News

It's Deja Vu With Flat E-Commerce Growth in Q1

It's deja vu for many online store owners as etail e-commerce sales remained flat in the first quarter, checking in with no change year-over-year, according to comScore's Q1 2009 retail e-commerce sales estimates.

Still, that's better than year-over-year loss for the fourth quarter of last year, which was down by three percent compared to Q4 of 2007, according to comScore.

And the news isn't all grim for Q1, with some sectors showing signs of resilience despite the recession. The fastest-growing category in Q1 2009 was Sport & Fitness, which continues to grow as consumers demonstrate a willingness to purchase major fitness equipment, such as treadmills and stationary bikes, online, according to the comScore (NASDAQ: SCOR), report.

Books & Magazines grew 19 percent, followed by Video Games, Consoles & Accessories at 12 percent and Computer Software checked in with 12 percent growth.

"Although online retail spending growth was flat in the first quarter, this does represent a slight improvement over the disappointing fourth quarter," comScore Chairman Gian Fulgoni said in a statement.

"These results would appear to indicate that the economy is finally exhibiting some signs of stability, and with consumer confidence beginning to improve, I’m optimistic that the online channel is poised for a return to positive growth in the second half of 2009," he said.

The comScore data comes out as the souring economy forces a shift in e-commerce marketing tactics - with the number of e-tailers focusing on customer retention doubling in the past year, according to yet another recent report.

Change in tactics

The recession is forcing online retailers to change their marketing tactics in order to acquire and retain customers, according to a study released last week, "The State of Retailing Online 2009," the 12th annual Shop.org study conducted by Forrester Research.

The survey of 117 online retailers also found that while the number of companies focusing on customer retention has nearly doubled in the past year, many e-commerce companies see the recession as an opportunity to capture market share from weakened competition.

Earlier this year, Forrester forecast that U.S. online retail sales in 2009 would grow by 11 percent to $156 billion, but online store owners used to growth at double that rate are feeling the pinch.

Half of respondents, 54 percent, expect overall growth to slow during the next 12 months and 57 percent acknowledge the economic slowdown is hurting their company's bottom line, according to the survey.

That said, companies are bullish about Web sales: four out of five retailers think the Web is better suited than other channels to withstand the recession and one-third say the downturn has enabled them to capture greater market share.

Illustrating the resilience of the Web, retailers report that their conversion rates continue to hover between three percent and 3.5 percent as they have for years, the report says.

News of online market budgeting comes on the heels of grim revenue data for online sales and online ad spending. The three percent dip reported by comScore in Q4 2008 is a steep comedown from the growth rates of around 20 percent retailers enjoyed throughout 2007.