E-commerce continues to grow(69802)

E-retail puts together back-to-back double-digit growth quarters

The double-digit growth in e-commerce in the fourth quarter was no fluke: The U.S. Commerce Department reported today that e-commerce sales grew 14.3% in the first quarter, following the fourth quarter 14.6% gain. It was the first time since the first quarter of 2008 that e-commerce sales grew by more than 10% year over year for two quarters in a row.

The Commerce Department figures also show the continuing shift of retail sales to the web. While e-commerce grew 14.3% compared to the first quarter of 2009, after adjusting for seasonal variations, total retail sales grew only 6.3%. Sales at stores, excluding grocery stores, grew only 3.42%, meaning that e-retail grew at more than four times the rate of the stores that web retailers mainly compete against.

Put another way, 7.95% of Q1 retail sales took place online, not counting purchases of groceries, automobiles, fuel oil and restaurant meals that rarely take place on the web. That was up from 7.20% in the first quarter of 2009. This is an Internet Retailer estimate based on Commerce Department data. Counting retail sales of all types, the web accounted for 4.0% of total sales in the first quarter of 2010 versus 3.7% a year earlier, the Commerce Department says.

E-commerce sales totaled $38.7 billion in the first three months of 2010, when adjusted for seasonal variations but not for price changes. That represented a 1.6% increase over seasonally adjusted e-commerce sales of $38.1 billion in the fourth quarter of 2009.

Without the seasonal adjustment, e-commerce sales totaled $36.6 billion in the first quarter, down 18.9% from the fourth quarter of 2009. On a non-adjusted basis, the year-over-year e-commerce growth was 14.0% and total retail growth was 6.8%.

The Commerce Department estimate came in higher than the 12% growth that retailers reported to Forrester Research Inc. in an April survey by the research and consulting firm. But it doesn t surprise Forrester e-commerce analyst Sucharita Mulpuru that the web is steadily taking a larger share of retail sales.

The web continues to win because it s a channel where consumers can easily price compare, where the selection continues to be superior, Mulpuru says. It s a channel that consumers are getting more accustomed to every day now that more consumers have more access to the web more hours daily than ever before, and because the shopping experience frankly is getting to be more fun. You can create outfits online, you can share products with others, you can read customer opinions on topics, you can watch videos. It s a much more immersive experience than ever before and that engages people.

Other e-commerce executives voiced similar sentiments.

"The first quarter growth reported by the U.S. Commerce Department is certainly in line with the growth our customers are seeing across all channels for same-store-sales," says Scot Wingo, CEO of online marketing service provider ChannelAdvisor Corp. "With many big-box retailers finding themselves casualties of the recession, there is more demand than ever for the selection that is available online.

Further, e-commerce innovations such as expedited delivery and in-store delivery have helped online retailers close the convenience gap. E-commerce will definitely continue to gain market share as consumers become more comfortable shopping online and even through their mobile phones."

Eric Best, CEO of Mercent, another provider of marketing services to e-retailers, says the first quarter registered the strongest increase since Mercent began reporting aggregate growth of its customers in the fourth quarter of 2008. Mercent's same-store client sales surged 38% in the first quarter. "Given the strength we saw during the Q4 holiday and the general sense of slow but steady recovery in the markets, I'm not surprised by the Commerce numbers," Best says.

E-commerce continues to grow

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