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Study: Online retailers profitable in 2008

October 16, 2009

Washington--Despite a deteriorating economic environment in 2008, coupled with the worst holiday season in decades, 57 percent of online retailers surveyed for Shop.org's "State of Retailing Online 2009" reported they were more profitable in 2008 than 2007.
 
According to the survey, which polled 117 retailers and was conducted by Forrester Research Inc., online retailers adjusted to the economy in a variety of different ways. Nine in 10 retailers (91 percent) focused on preserving margins, while 88 percent of retailers amplified promotions or increased "value" messaging. Slightly more than half of retailers (53 percent) lowered prices as a result of the economy.

Meanwhile, some online retailers (33 percent) said they increased market share last year, according to the survey.

"Many Americans are heading to the Internet first to look for sales and promotions, especially when shopping for gifts and big purchases," Shop.org Executive Director Scott Silverman said in a media release. "Though online retailers have had their challenges within the past year and watched consumers pull back on spending, e-commerce continues to be a bright spot in business."

As the economy begins to stabilize and consumer confidence grows, online retailers are hopeful for the future with guarded optimism. Four out of five online retailers (60 percent) believe the U.S economy will improve within the next year, and half think their online business will actually fare better than expected in the next 12 months.

That said, retailers are being cautious internally: Even though the overall sentiment about online retail is strong, 38 percent said they have actually lowered expectations around their online business, even though the overall sentiment about the channel is strong.

According to Forrester Research Principal Analyst Sucharita Mulpuru, while online retailers have been able to navigate better than most through the economic downturn, companies should continue to focus on keeping costs low and integrating the online and offline channels to be best positioned when the economy bounces back.

Founded in 1996, Shop.org is a division of the National Retail Federation and the world's leading membership community for digital retail. Shop.org's 700 members include the 10 largest retailers in the United States and more than 60 percent of the Internet Retailer Top 100 E-Retailers.

Forrester Research Inc. is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology.
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