Online Retail Spending Reaches $39 Billion In Q4

Online retail spending in the U.S. in the fourth quarter reached $39 billion, a 3 percent increase compared to a year ago, according to the latest report from comScore.

Total retail ecommerce spending reached $129.8 billion in 2009, slightly lower than the previous year's total of $130.1 billion.

"The fourth quarter, with a 3 percent year-over-year growth, helped end what has been a disappointing year for online consumer spending on a more positive note," said comScore chairman Gian Fulgoni.

"As we head into 2010, there is reason for guarded optimism for online retail spending to continue to gain share of consumers' wallets. At the same time, I expect absolute growth to be stymied by continued high unemployment and the deleveraging that is occurring in the economy as consumers exercise their new found propensity to save."

The largest online retailers, led by Amazon and Walmart, gained market share of ecommerce sales compared to small and medium-sized retailers.

Spending growth was driven by an increase in online buyers, while average spending per buyer saw modest declines.

Other highlights from the report include:

 

• Free shipping factored into more than 40 percent of e-commerce transactions during the holiday season.
• Tuesday, December 15 ranked as the heaviest U.S. online spending day in history at $913 million.

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Holiday Shoppers Turning To Social Media And Internet

Digital technologies continue to drive a new approach to shopping, with social media and mobile phones becoming key influencers this holiday season, according to a new survey of holiday retail spending and trends by Deloitte.

Social media is gaining traction with 17 percent of consumers planning to use social media during their holiday shopping, and 60 percent plan to use it to find discounts, coupons and sales information, More than half (53%) plans to use social media to research gift ideas, while 52 percent plan to check the gift wish lists of friends and family.

Consumers in all age groups plan to embrace social media over the holidays. While more than half (52%) of those who expect to use social media during the shopping process are in the 18-29 years old age group, 33 percent are in the 30-44 years old age group and 12 percent are in the 45-60 years old age group.

The mobile phone is another digital tool for the holidays that is on track to be used by 19 percent of consumers to help with their holiday shopping. Those consumers plan to find store locations (55%), research prices (45%), find product information (40%), get discounts and coupons (32%) and read reviews (31%). A quarter plan to make a holiday purchase with their phone.

The Internet ranks as a top shopping destination and continues to see steady growth. Nearly a quarter (22%) of consumers indicate they will shop primarily online this year and many are using the Internet to find special offers, with 44 percent of shoppers expecting to use a coupon they get online.

Reviews have become another key online source of information, with 39 percent of consumers indicating they often read consumer-generated reviews of stores or products online, and one-quarter (25 percent) saying they will likely purchase a product this holiday season based on an online recommendation. More than a third (34 percent) say that online consumer reviews and ratings influence their buying decisions more than advertising.

"Consumers are turning to mobile, online and social media during their entire holiday shopping experience," said Stacy Janiak, vice chairman and Deloitte's U.S. Retail leader. "Retailers should consider harnessing this activity to turn browsers into buyers with one-click access to coupons, promotions and purchasing tools."

"This year's leaner in-store inventories may also open the door for retailers to lure customers to their online channels where it is easier to access inventory, no matter where it is located."

The Internet is also changing the traditional store-based purchase process. Almost half of consumers (48%) say they like the convenience of shopping with multi-channel retailers, and 78 percent indicate they have purchased an item in a retailer's store after viewing or researching the product online. In addition 65 percent have done the opposite and purchased an item on retailer's website after viewing it in the store or catalog.

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Poor Customer Service Holding Back E-Commerce Sales

Earlier this month comScore released its Q2 retail e-commerce sales estimates, which indicated that US online retail spending dropped from the same period from last year. This is only the second time that has happened.

Sure, you have to take the economy into consideration, but there are other factors that can keep people from making purchases online. A new poll from Harris Interactive found that a lack of human assistance is one of those factors, and a big one at that.

Here are some interesting findings from that poll:

- 4 in 5 online adults who have purchased items online in the last six months (77%) say they would be interested in getting help from a real person before making certain online purchases.

- However, over 4 in 5 (82%) say there have been times when they have not been able to get help from a real person.

- Over half (52%) of those who haven't been able to get the help they needed from a real person say it's affected their decision to not purchase the product.

Just look at the following graphs:

 

"No level of automation can replace the human touch. The results indicate that shoppers still want real people to help them purchase products, even in a digital setting," said Prashant Nedungadi, CEO and founder of IMshopping, who commissioned the survey. "Many retailers have started taking steps in this direction and we believe it will be the single biggest push for the retail industry over the next several years."

The following graph shows some of the types of items people really want human assistance with before making purchasing decisions.

Out of the people who have purchased items online in the past six months, the most commonly purchased items include clothing, books, music, health and beauty products, and travel-related items.

While it is a good idea to make the online purchase as easy on your customers as possible, from simply the design and usability standpoint, you may consider whether or not you are offering enough human assistance, and how easy that is for the customer to obtain.

eCommerce Sales Down From Last Year

comScore has released its Q2 retail eComerce sales estimates, which indicate that US online retail spending totaled $30.2 billion, which is 1% less than the same period last year. This is only the 2nd time eCommerce spending has been lower for the same quarter than the previous year.

"The marginally negative growth in Q2, on the heels of flat growth in Q1, signals that online retail spending has yet to turn the corner after a disappointing end to last year," says comScore chairman Gian Fulgoni. "Unfortunately, it appears that the reality of nearly 10-percent unemployment and rising gas prices, coupled with an increased savings rate, continues to hold down consumers’ discretionary spending and it may still take some time to dig our way out of this recession."

Here are a couple of charts from comScore worth checking out:

As you can see, the fastest growing category for the quarter was Toys & Hobbies, which grew by 21% from the previous year. This was followed by Books & Magazines, and Video Games, Consoles & Accessories.

It's not entirely surprising that online sales are down from a year ago, considering the changes in the economy that have taken place in that time. Necessities (like groceries) are still mostly bought offline. Typically, I think people tend to shop for things that aren't truly "needs" when they do their online shopping, and so it makes sense that these sales would fall in tough times.

If anything, it simply highlights the importance of good marketing strategy for eCommerce businesses. Not only are you dealing with a damaged economy, but there is a lot of competition online.