RealTime IT News

Economy Sends E-sales Into Negative Territory

E-commerce sales continue to suffer, with online retail spending pegged at $30.2 billion, down one percent compared to a year ago -- only the second quarter on record where e-commerce spending has been lower than the same quarter the previous year, according to comScore.

The fastest-growing category in the second quarter of 2009 when compared with Q2 2008 ago was Toys & Hobbies, which grew 21 percent, followed by Books & Magazines, up 17 percent, and Video Games, Consoles & Accessories with a 15 percent increase.

E-commerce had been growing dramatically in the past few years, with comScore reporting 23 percent upticks for both Q2 and Q3 of 2007.

By the second quarter of last year, however, the figure dropped to 13 percent -- the last double-digit gain. In Q3 of 2008, growth was at six percent, and from there it decreased to three percent for the end of last year and remained flat for this year's first quarter.

"The marginally negative growth in Q2, on the heels of flat growth in Q1, signals that online retail spending has yet to turn the corner after a disappointing end to last year," Gian Fulgoni, comScore chairman, said in a statement.

Fulgoni says a near-10 percent unemployment rate coupled with an increased savings rate continues to hold down consumers' discretionary spending.

In terms of how the Internet is affecting shopping behavior, comScore data for Q1 shows three-quarters of people are likely to collect information online before buying offline, prompting Fulgoni to advise e-tailers to move marketing budgets to building brands online.

For Q1, he also reported that the 72 percent said search engines were "very important" in influencing buying behavior, 54 percent cited online coupon sites as very important, followed by comparison shopping sites at 46 percent, auction sites at 44 percent and online classifieds at 36 percent.

On the shopper expectation front, 64 percent say product details are important, 60 percent said incentives were an important feature, followed by easy site navigation with 46 percent and product reviews with 42 percent.

While the quarter saw sales results go negative, other data suggests that e-commerce will still fare well overall this year. U.S. online retail sales in 2009 are slated to grow by 11 percent to $156 billion, according to Forrester research data issued earlier this year.

Despite a dip in growth numbers, companies are still 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, according to the Forrester study.