Global Economic Downturn: Predicting The Future Of E-commerce In The Short Run

After years of growth rates of in the double digits

, e-commerce sales are projected to increase at a single-digit pace through 2012. There are two forces acting toward this trend: the economic downturn has added additional downward pressure on short-term sales, and according to some sources, the population of Internet buyers is approaching saturation. The global economic downturn undercut consumer retail spending in most channels, except the U.S. online channels, which analysts forecast to reach $229.1 billion in 2013, or 8 percent of total U.S. retail sales.

Some executives are more optimistic. Jeff Bezos, founder of Amazon.com, has said on several occasions that e-commerce will account for up to 15 percent by 2016. The major catalyst for e-commerce growth in the short term seems to be in stimulating existing online shoppers to continue to buy and to shift a greater percentage of their total purchess to the web. To do this, companies will employee online marketing initiatives but also stress the convenience, broader selection, and ostensible cost savings associated with buying online. In the longer term, teenagers already spending online will acquire more purchasing power and independence and will invigorate the online channel.

More than half of online retailers believe that the outlook for the retail industry as a whole is gloomy and that retail sales will continue to slow in the coming 12 months. But 8o percent of online retailers said that they believe that the Web channel is better suited than other channels to withstand an extended economic downturn. (But more than half also think that multi-channel retailers are better suited to weather the economic turbulence than single-channel retailers). E-commerce retailers report that their conversion rates continue to range from 3% to 3.5% as they have for years, which is another indication that the Web has not been as adversely impacted as other channels.

Going forward, online retailers will continue investing heavily in interactive marketing, a significant expenditure for e-commerce groups. In this vein, companies will experiment with social commerce initiatives, even though questions still remain for social marketing ROI, such as blogs and social networks. Acquiring new customers is still the number one goal of online marketing efforts. While other retail channels struggle to innovate and perform, e-commerce managers have a unique opportunity to drive more sales and to test different tactics that resonate with consumers. Even more so now than in fatter times, retailers must strictly segment their customer groups and create messaging that speaks directly and powerfully to these groups.

by: Josh O'Berski

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