Online Retail Flatlines

e-Commerce is not expected to recover soon.

by staff writer
- May 18, 2009

Online spending seems to have bottomed out and, while recovery may be slow, researchers are looking for e-commerce revenue to start showing positive growth in the second half of this year.

comScore reports online spending was flat during this year's first quarter, which didn't help e-commerce after finishing 2008 on a bad note with a 3 percent drop in sales. That's because even shoppers with disposable income are tightening their purse strings.

Gian Fulgoni, comScore's chairman, notes that even those consumers who make more than $100,000 a year only increased their spending online by 3 percent this year. That compares to a 17 percent increase in online spending during the last three months of 2008.

Consumers over the age of 45 spent 11 percent less during this year's first quarter.

Sales should improve as the year goes by, Fulgoni predicts, but the market probably won't see double-digit growth.

"My conclusion from this is that consumers still remain very, very cautious in this economic environment," Fulgoni says. "I think we've bottomed out.

"The good news, albeit small, is we're looking flat," he adds."

But offline commerce fared worse, dropping by 8 percent during this year's first quarter, reports the Department of Commerce. And even those who did purchase items at brick-and-mortar shops went online to compare prices.

"Clearly, e-commerce is picking up market share," Fulgoni notes. "If [retailers] can focus on e-commerce, that's where dollars seem to be shifting in retail."

Sales of sports and fitness gear increased, as did books and magazines, and video games. Every other category saw a drop in sales.

First-quarter spending, though flat, showed a slight improvement over the disappointing fourth quarter—a sign that the economy is stabilizing, Fulgoni notes. And while optimistic that the online channel will post positive growth in the second half of 2009, the comScore executive remains cautious.

"Until (buyers) regenerate a significant portion of their wealth, I worry we are not going to see a rebound," he says. "Whether we are in a transition, or we are going back [to previous spending habits], it's the issue that I worry about most."

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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