Retail E-commerce Spending Grows 4th Straight Quarter
comScore estimates show US online retail spending reached $32.1 billion during Q3 2010, up 9% from $29.5 billion in Q3 2009. This growth rate represented the fourth consecutive quarter of positive year-over-year growth following a year of flat or negative growth rates.
More specifically, retail e-commerce spending grew 3% year-over-year in Q4 2009, then increased 10% in Q1 2010 and 9% in the second and third quarters of this year. Prior to Q4 2009, retail e-commerce spending went through a quarter of negative growth, flat growth, and two more consecutive quarters of negative growth.
While the past four quarters represent a marked improvement from the four quarters preceding them, retail e-commerce growth rates are still significantly below those reported during 2007, which ranged from 17-23%. They are more in line with the respective 11% and 13% growth rates reported during the first two quarters of 2008 (the current recession is generally considered to have started in December 2007).
Unemployment Potential Issue
Although third quarter retail e-commerce growth is a fairly positive indicator for the upcoming holiday season, comScore continues to advise retailers to exercise caution.
“The continuation of high unemployment…is creating very divergent spending patterns between the ‘haves’ and the ‘have nots,'” said comScore chairman Gian Fulgoni. “Even Americans who do have jobs still aren’t confident enough to spend freely and many are still pained by their loss of wealth since the financial crisis struck in 2008. That and a higher consumer savings rate leaves less money for spending. Until the economy begins adding jobs at a meaningful rate, the lack of spending power among consumers will continue to be a drag on purchasing, with many consumers indicating their intention to cut back on gift buying this holiday season.”
Other Q3 2010 Findings
- The top-performing online product categories were books & magazines (excl. digital downloads), computers/peripherals/PDAs, computer software (excl. PC games) and consumer electronics, indicating a higher willingness of consumers to spend on in-home entertainment.
- The top 25 online retailers accounted for 70% of dollars spent online, up 8.5% from 64.5% in Q3 2009. Online “pureplay” retailers accounted for 58% of dollars spent online compared to 42% among multichannel retailers, unchanged from Q3 2009.
- Forty-one percent of online retail transactions included free shipping in Q3 2010, down marginally from last year.
E-commerce Popular with Back-to-School Shoppers
E-commerce was popular with back-to-school shoppers during the third quarter of this year, according to a recent survey from the National Retail Federation (NRF) and BIGresearch. The survey found more families will use the internet for school purchases this year. Up from roughly 12% last year, 16% of K-12 families said they would finish their back-to-school shopping online in August 2010.