eCommerce Sales 2008: Bad News or Not-So-Bad News? (Is there an opportunity for you here?)

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News of a drop in holiday sales comes as no surprise this year. Overall holiday retail sales were down 5.5% in the month of November, and 8% in December up to the day before Christmas, compared to the same periods in 2007, according to MasterCard Advisors, a subsidiary of MasterCard Worldwide.

But wait! eCommerce sales were not down by as much as overall retail sales.

ComScore’s end-of-season online sales figures put the tally at $25.5 billion, down “only” 3% from a year ago. And MasterCard Advisors’ report says overall ecommerce sales ended the season with a decline of “only” 2.3% (the emphasis is mine).

But wait! Unique visitors to eCommerce sites were actually up.

According to ComScore, while e-commerce sales were down, unique visitors to retail websites during the holiday shopping season were actually up 5%

Yes, more people than in past years were actually shopping online; it’s just that they were not generating as many transactions or spending as much.

It occurs to me that there is an opportunity here:

The hardest and most expensive part is getting web visitors to come to your site. Once they are there, the opportunity to test different merchandising (ie. web page design) options; different checkout procedures; different offers; etc is there just like it is in stores, where retailers routinely test different merchandising options as well as signage to determine how to move more merchandise.

So you need to be ready.

Analysts agree the outlook for early 2009 is worse. Piper Jaffray & Co. analysts estimated that online sales will drop 10% next year as consumers “significantly rein in discretionary spending and save more of their income to rebuild wealth and savings in the coming quarters.”

On a more positive note, S&P analysts predict that sharp cutbacks in retail inventory in 2009 may strengthen retailers’ margins, even amid weak sales.

In this environment, eCommerce retailers must push all the buttons and pull all the levers available to them, and testing the way their web pages convert ranks high in terms of ease of execution and low in terms of cost. Worth a try, I’d say.

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