Most online retailers are somewhat optimistic about business during the next year. Seventy-two percent of those surveyed said they believe the online channel is better suited to withstand an economic slowdown than offline channels.
The 11th annual shop.org study, The State of Retailing Online 2008, was conducted by Forrester Research.
Thirty-five percent of online retailers surveyed said they think their online business will exceed their expectations during the next 12 months. Their optimism is driven by history. Eighty-one percent of online retailers surveyed said their e-commerce business was profitable in 2007, and 75 percent reported greater online profitability in 2007 than in 2006.
The report advises that online retailers must execute well in order to produce sales and cautions that increased costs and the pressure to offer promotions such as free shipping will cut into sales.
“Although the online sales growth rate will be lower than in years past because of lowered consumer confidence and credit working against all of retail, the good news is that this growth will still outpace nearly every other sector of consumer spending,” said Sucharita Mulpuru, Forrester Research principal analyst and lead author of the report. “Given that the Web appears to be a preferred channel for many consumers during an economic downturn, retailers would be well served to provide offers that motivate customers to buy.”
Earlier this week, we reported on a survey revealing that most Americans live paycheck to paycheck and suggested that it might be time to reinstate layaway. Then, yesterday, Home Depot was in the news for lowering prices on certain items in an effort to draw customers into stores.
And now comes this survey, which should tell all retailers to take a serious look at their Web component and make any improvements needed. In other words, do whatever it takes to bring customers to your store, literally or virtually.