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Study finds e-commerce is the rising star of retail, despite economic gloom

Bricks-and-mortar retail may be suffering from a slowing economy and diminishing consumer confidence, but there are no signs that rumours of a recession are affecting online commerce.

Online sales are set to rise this year by 17% globally, with particularly strong growth in clothing, computers and cars, making online shopping a bright spot amid the woes afflicting ‘walk-in’ retail.

A study conducted by Forrester Research found that, while the explosive growth of online commerce was down 4% compared with last year, this slowdown was attributable to the maturing of the Internet as a business model.

An example of the maturation and widespread acceptance of e-commerce was a drop in the number of retailers enticing buyers with extras such as free shipping.

The 125 retailers surveyed for the study said that they were much less likely to offer free shipping as an incentive, with only 35% saying they would consider it compared to 85% last year.

Senior research analyst Sucharita Mulpuru said that the boom in e-commerce growth was “a tale of two shoppers that visit the web for different reasons”.

“The casual shopper goes online to look for the best price, leveraging the transparency of the Internet to save money,” she explains.

“However, more affluent customers appreciate the convenience of shopping online and are not necessarily looking for the best deal. Retailers would be wise to recognise that there are significant opportunities within both audiences, and should market to them accordingly.”

As for advertising, 65% of retailers said they were considering advertising through social networking sites such as Facebook and MySpace this year.

One reason for the rapid growth of e-commerce could be the economic slowdown itself, with the perception of the Internet as a bargain-hunter’s paradise driving people out of shops and online.

Certainly the walk-in retailers promising the greatest levels of growth are discount and wholesale outlets; not unexpected considering that the rising cost of living and slumps in the housing and job markets are discouraging people from making expensive purchases.

The UK’s uptake of online shopping has been one of the highest in Europe – over the Christmas period 27 million shoppers spent an average £550 online.

Further Reading

Excelling online Nick Lansley, head of research and development at Tesco.com, explains how the company is refining the customer experience.

Automated e-marketing at online retailer Pixmania Developing its own market analysis tools has helped drive business growth at online electronics retailer Pixmania.

Find more stories in the CRM & Marketing Briefing Room