Retail E-Commerce Growth Drops Sharply

• Posted: Saturday, November 29, 2008
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• Author: pradhana
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• Filed under: e-Commerce

Online sales are still growing, but far more slowly.

2008 had already been shaping up to be the weakest holiday season yet for retail e-commerce. Based on just-released Q3 e-commerce data from the US Department of Commerce (DOC), eMarketer is predicting even more anemic growth—both for the holiday and the year.

The DOC estimated that e-commerce sales grew only 4.6% in Q3 2008, compared with Q3 2007.

In May 2008, eMarketer projected that retail e-commerce sales growth would drop to 14.3% this year compared with 2007. Benchmarked against the new DOC data, eMarketer predicts 2008 will now be the first year of single-digit growth of the decade.

Online sales (excluding travel) will total nearly $137 billion in 2008, up 7.2% year-over-year, compared with last year’s 19.8% growth rate.

eMarketer expects that consumers will spend only $30.3 billion online in November and December this year. Its May number was a mere 10.1% growth over last year’s holiday spending. But the new estimate is for just 4% growth.

The weak economy is placing downward pressure on e-commerce sales this season. Online shopping growth had already been slowing naturally as part of the channel’s maturation; the economy is slowing growth even more.

“Hopefully, we’re nearing the bottom of this,” says Jeffrey Grau, eMarketer’s e-commerce analyst. “People are going to be more frugal this holiday season." [eMarketer]

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