Despite Economy Online Retailers are Optimistic, See Opportunity Ahead
Despite a progressively deteriorating economic environment, including the worst holiday season in decades, 57% of online retailers surveyed for Shop.org’s State of Retailing Online reported they were more profitable in 2008 than 2007. The survey polled 117 retailers and was conducted by Forrester Research, Inc.
“Many Americans are heading to the internet first to look for sales and promotions, especially when shopping for gifts and big purchases,” said Scott Silverman, Executive Director of Shop.org. “Though online retailers have had their challenges within the past year and watched consumers pull back on spending, e-commerce continues to be a bright spot in business.”
According to the survey, online retailers adjusted to the economy in a variety of different ways. Nine in ten retailers (91%) focused on preserving margins, while 88% of retailers amplified promotions or increased “value” messaging. Slightly more than half of retailers (53%) lowered prices as a result of the economy.
As the U.S. economy suffered in 2008, the environment provided an opportunity for some online retailers to focus on gaining market share while other retailers struggled. For many, that concentration proved successful: according to the survey, one-third of online retailers (33%) said they increased market share during the downturn.
“While online retailers have been able to navigate better than most through the economic downturn, companies should continue to focus on keeping costs low and integrating the online and offline channels in order to be best positioned when the economy bounces back,” said Sucharita Mulpuru, Forrester Research principal analyst.
As the economy begins to stabilize and consumer confidence grows, online retailers are hopeful for the future with guarded optimism. Four out of five online retailers (60%) believe the U.S economy will improve within the next year, and half (50%) think their web business will actually fare better than expected in the next 12 months. That said, retailers are being cautious internally: even though the overall sentiment about online retail is strong, thirty-eight percent said that they have actually lowered expectations around the Web business, even though the overall sentiment about the channel is strong.
“The State Of Retailing Online 2009: Profitability Report,” conducted by Shop.org, a division of the National Retail Federation (NRF), October 16, 2009. Website: www.nrf.com.