According to a new survey, the majority of online retailers were profitable in 2008 with more than half earning more money in 2008 than 2007. The positive results came despite the deteriorating economic environment, including last year's brutal holiday season.
The survey of 117 retailers was conducted by Forrester Research for Shop.org, a division of the National Retail Federation.


“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, a division of The National Retail Federation. “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.”
Of those surveyed, a third believed they increased market share during the downturn. The majority of respondents, 87%, were profitable. Of those who indicated they were profitable, 57% said they were more profitable in 2008 than the year before.


Commenting on the survey, Forrester and Shop.org said that online retailers adjusted to the economy in a variety of different ways. Nine in ten retailers (91 percent) focused on preserving margins, while 88 percent of retailers amplified promotions or increased “value” messaging. Slightly more than half of retailers (53 percent) lowered prices as a result of the economy.


Conversion rates in 2008 averaged 3.4% and slightly fewer than half of online retailers said their conversion rates increased. Shopping cart abandonment rates were 51%. Average order value was $183, with three being the average number of items per order. Returns as a percentage of total orders were 7%. Typically, retailers made 6% of their revenue from shipping. They spent an average of $14.30 in marketing and $8.15 in fulfillment costs per order.


In the social media realm, more than 60% of merchants said they have pages on sites such as Facebook. Slightly more than half offer customer ratings and reviews, use microblogs such as Twitter and have their own retail blog or online community. Widgets, crowd-sourced help, virtual worlds, outfit sharing and other forms of social media were much more rare.


Looking ahead, 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. Nonetheless, 38% said that they have actually lowered expectations around the Web business, even though the overall sentiment about the channel is strong.
Nationally, online retail sales are expected to rise 11% this year to $156 billion, according to Forrester Research. That’s slightly below last’s year 13% growth.

 

September Retail Sales Ex-Autos Rise 0.5%

 

The US Census Bureau announced that U.S. retail sales for the month of September decreased 1.5% from August, to $344.7 billion, and fell 5.7% year-over-year, due to the end of the Cash for Clunkers program.  Excluding autos, sales rose 0.5% in September.


Economists, on average, were projecting a 2.3% decline in overall sales and a 0.3% rise in ex-auto sales.


The National Retail Federation said that thanks to cooler weather, Labor Day sales and a final push for back-to-school shopping, clothing and clothing accessories stores sales increased 0.5% adjusted from August but decreased 0.4% unadjusted year-over-year.