Online Retailers Optimistic
Posted on September 19th, 2008 by Mike Sachoff in the Articles section
Even with economic turmoil throughout most of this year, the majority of online retailers remain cautiously optimistic about how their businesses will perform in the next 12 months.
The majority (72%) of online retailers believe that the online channel is better suited to weather an economic slowdown than offline channels, according to The State of Retailing Online 2008, from Shop.org conducted by Forrester Research.
“Internet retailers have good reason for optimism as budget-focused shoppers head to the web for value and convenience,” said Scott Silverman, executive director of Shop.org. “Online retailers are well-positioned to make the best of a potentially lean holiday season.”
Thirty-five percent of online retailers surveyed said they expect their online business to perform better than expected in the next 12 months and 33 percent believe their online business will perform the same as expected.
This optimistic outlook is mainly due to past results. According to the report, 81 percent of online retailers said their ecommerce business was profitable in 2007, and 75 percent were also more profitable last year than in 2006.
Close to half (49%) of online retailers said their average conversion rate in 2007 was higher than in 2006, and that 36 percent of total sales for online retailers were due to repeat customers. Because of their outlook for the US economy, 37 percent of survey respondents indicated that they’ve lowered their expectations for their online business performance in the next 12 months.
“Although the online sales growth rate will be lower than in years’ past because of lowered consumer confidence and credit working against all of retail, the good news is that this growth will still outpace nearly every other sector of consumer spending,” said Sucharita Mulpuru, Forrester Research principal analyst and lead author of the report.
“Given that the web appears to be a preferred channel for many consumers during an economic downturn, retailers would be well served to provide offers that motivate customers to buy, and to encourage the online channel to drive sales in a channel-agnostic manner in order to provide benefits to the entire business.”