Online Retail Report, Q1 2013, Part I

online retail



A review of key macroeconomic trends sourced from comScore’s global panel of 2 million Internet users via behavioral tracking and custom surveys




Once again we present the findings from a comprehensive “state of online retail” compiled by the folks at comScore! Thanks to their efforts, some truly interesting figures have come to light from across the e-commerce spectrum. We’ll outline some major trends, then focus on areas of note for U.S. e-tailers. This is Part I in a two-part series—there’s just too much to take in at once.

For more context, as well as a rich trove of graphic representations, please consult the original study.


The Big Picture

E-commerce spending is up 11% vs. Q1 2012 (including 13% gains for Retail and 8% gains for Travel). In general, the differential between e-commerce spending and total discretionary spending continues to widen, with the former’s 13% growth far outstripping the latter’s 1% growth. In other great news, almost 11% of all discretionary dollars were spent online in this quarter, the highest percentage to date. Changes are afoot!


Consumer Perceptions of the Economy


• When asked, “How would you rate economic conditions today?”, only four in ten respondents rated the economy as “poor,” the lowers level since January 2009.
• For the eighth consecutive quarter, rising prices remain the chief concern for consumers, followed by unemployment, financial markets, and home values (at 45%, 33%, 10%, and 7%, respectively).
• In response to new Fiscal Cliff changes in payroll tax laws, 7 in 10 Americans are changing their spending habits. Among those, 46% are spending less overall, and 32% choose to use coupons more often.


Retailer and Product Category Overview

Almost all key e-commerce metrics have shown solid growth compared with Q4 2011:
• Dollar sales are up 13%.
• Overall transactions are up 10%.
• Average order value is up 3%.
• Transactions per buyer is up 5%.


By retail category, online sales posted encouraging growth:
• Mobile phones and plans grew 34%.
• Portable devices (e.g., tablets) slowed slightly with growth of 25%.
• Desktop computers continue a downward trend with a loss of 16%.


Online Retail and Digital Advertising


The whole idea of a division between these two sectors is breaking down. The large players act symbiotically in a tight feedback loop, feeding advertising with commerce and vice versa. Purchase-based targeting in particular has seen success, driving 38% higher boosts in in-store sales among consumers receiving ads.

By taking advantage of mobile, leading retailers are beginning to compete with publishing giants. Within the top 15 digital media properties by audience, March 2013 standings are as follows:
• Google Sites take the lead with a whopping 237M visitors.
• Amazon is not far behind with 164M. Amazon’s ad impressions display 40% year-over-year growth, an indicator that the company is now a major player in that realm by leveraging reams of browsing/buying data.
• eBay brings up the rear with 92M.


In response to Amazon’s initiative, major advertisers are scrambling to drive in-store (not online) purchase behavior. Weight Watchers and Procter & Gamble Co., both driven by offline product sales, nonetheless are among the top advertisers on Amazon by Display Ad Impressions with figures in the hundreds of thousands.


Taxes and Shipping

Consumers have spoken: free shipping is by far the most valuable online shopping factor. Compare averages on a 1-5 importance scale, with 1 being the most important:
• Free shipping = 1.77
• Exclusive online deals = 2.57
• No sales tax = 2.86
• Fast shipping = 3.52
• In-store pickup = 4.28


Turns out that with increased frequency of online purchasing comes significantly increased concern with online sales tax! A full 46% of those who shop online at least once a week consider themselves “very concerned,” versus just 31% of those who shop online less than once a week.

Within the scope of e-commerce, multi-channel retailers account for the majority of retail spending, yet their sales grow slower than pure-plays:
• Multi-channel retailers comprise 63% of all retail e-commerce sales, but only grew 11% in dollar sales year-over-year.
• In contrast, pure-play retailers comprise just 37% of retail e-commerce sales, but their year-over-year dollar sale growth totals 17%. Note: this higher growth rate could by diluted by collection of state sales taxes.

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