opinion

Online Sales Growth

Joe D

Results of a survey by Forrester Research and Shop.org show an increase in online sales by US retailers’ of 11 percent on average in the first quarter of 2009.

58 percent of the 80 companies considered reported increased sales during the first quarter compared to their 2008 Q1 figures. An analyst at Cambridge, Massachusetts-based Forrester Research appeared to credit improving consumer confidence levels combined with perceived bargains generated by current price competition for sales.

The survey may indicate how major e-commerce retailers are coping with the times; following what many say was the most disappointing holiday retail results in over 40 years. The report stated those companies with online annual sales greater than $250 million were actually enjoying the best results, so all eyes will be watching Amazon.com.

58% of surveyed companies answered that their Q1 Web sales rose year-over-year for the first quarter, 44% reported a more than 10% increase, 14% posted a sales increase of up to 10% and 13% reported flat Web sales. It was further revealed that 29% of merchants actually experienced a drop in sales, including 18% of companies reporting that Q1 online revenue dropped by more than 10% compared to 2008 results. Average growth for merchants across all categories was 10.8%.

The survey was conducted on April first and second and was based on inquiries by Forrester and National Retail Federation trade group division Shop.org, to share their Q1 Web sales figures. The average online annual revenue of respondents was $116 million, and we hope the reporting of results like these signals an improvement in overall economic health in spite of daily doom and gloom reports on other indicators.

Also in the news this week, InternetRetailer.com is reporting that most retailers plan to stand firm or increase resources for online retail expansion this year.

In spite of the challenging economy, 70% of US retailers intend to invest the same or somewhat more in e-commerce in 2009 over 2008 figures because it is the fastest-growing area of their businesses – based on The E-tailing Group 8th Annual Merchant Survey.

Retailers are seeking to replace now elusive brick and mortar sales with increased online sales and indeed are looking outside North America as well. Feeling distinct performance pressure like never before from investors and market watchers, executives are scrambling to find profits while competition online becomes more fierce and savvy shoppers demand more and more from the experience.

Of the 190 retailers surveyed, 34% expect their 2009 versus 2008 Internet revenue to be down or flat. This is important because historical Web sales have consistently delivered year-over-year growth. 66% of merchants responded that growth should continue this year, with 39% of these merchants predicting their revenue will increase between 1% and 15%.

Retailers are increasingly turning to technology to improve their sales. 44% said they anticipate changing e-commerce platforms within three years; while 42% report they have no plans to make such a change. However, given current resource constraints and economic instability…We are all hit by the challenge of programming resources; a worldwide dilemma for everyone. So while an E-tailing Group executive concedes platform upgrades are on many wish lists, actual strides may be limited to refinement of navigation, site search and site tweaks! The dominant players coming out of this recession will be those who successfully infused their online customers’ shopping experience with relevant and profitable Web 2.0 solutions.

The E-tailing Group foresees minor site modifications will be the order of the day for the time being – and let’s see how that goes as consumers now expect every online experience to be as exciting as their favorite reality TV show or American Idol, and every bit as interactive.

Sources and Further Reading on Related Topics

Bloomberg.com

Forrester Research

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