It was a bad year last year for on-line sales, they only grew 11% The retail market grew only 1.4 % work it out on-line is the way to go.
Last year showed online retailers an unpleasant and previously unacknowledged truth: E-commerce is subject to the same economic forces as the rest of the economy. For the first time in their dozen years of history, e-commerce sales grew at only a single-digit rate. But 2008 also confirmed what many e-retailers knew: Consumers are hooked on shopping online. As a result, online retailing has withstood the economic storm better than other areas of the industry and is one area of retailing that experienced growth last year.
Sales of the Top 500 online retailers grew 11.7% to $115.85 billion in 2008 from $103.69 billion in 2007 while Internet Retailer estimates the total retail sales market grew 1.4%. Those broad numbers, however, mask some interesting developments that indicate the fundamental strength of online retailing. For one thing, while chain retailers’ web sales were growing, their comparable-store sales were shrinking. In fact at 41 of the 50 biggest chains, e-commerce revenue grew as comparable-store sales declined. And at six, web sales declined, but not nearly as much as same-store sales.
In fact, overall web sales were responsible for 20% of the growth in total retail sales last year while accounting for about 6.5% of sales. Internet Retailer calculates that web sales across the board added up to $178.18 billion in 2008, up $7.7 billion, or 4.6%, from $170.41 billion in 2007. Sales across all general merchandise, excluding restaurants, gasoline stations and fuel sales, as measured by the U.S. Department of Commerce, equaled $2.744 trillion, up $39 billion, or 1.4%, from $2.705 trillion a year earlier.
Total online sales are made up of $115.8 billion in sales by the Internet Retailer Top 500, an Internet Retailer-estimated $21.6 billion in U.S. gross merchandise volume at eBay, and $40.7 billion in sales by online retailers not in the Top 500, an Internet Retailer estimate based on the U.S. Department of Commerce report of online sales. For the previous year, sales consisted of $103.7 billion in sales by the Top 500, $23.4 billion in U.S. gross merchandise volume at eBay and $43.3 billion in non-Top 500 sales. Clearly, 2008’s sinking economy took its toll on the smallest retailers—the non-Top 500 retailers and eBay sellers.