In 2009, e-commerce non-travel spending essentially remained flat at $129.8 billion according to comScore.  The research shop indicates that 2010 should be a better year for e-retailers. This sentiment is echoed by Forrester Research which put forth its own numbers in a recent release. Forrester pinpoints 2009 e-commerce spending at $155.2 billion and predicts steady growth of 7% annually through 2012. At that point, Forrester analysts see growth increasing by 8% between 2013 and 2014, at which point  online retail sales will ring up at over $249 billion.

Based on numbers provided in their press release, Forrester analysts are expecting e-commerce sales to increase as a percent of total retail sales.  In 2009, e-commerce comprised 6% of retail activity. By 2014, they expect this number to reach 8%.  These figures all assume a steady growth rate in retail sales and this kind of assumption  might be risky considering the continued levels of high unemployment across the U.S.

However, Forrester Research Vice President and Principal Analyst Sucharita Mulpuru is looking for retail growth to come from the e-commerce sector, especially as consumers begin to explore the wonders of mobile online shopping.  Analysts also point to the high customer satisfaction rate (82%) with Web shopping channels when compared to rates for purchases researched online and then purchased in a store (61%). In addition, consumers are expected to continue buying products that have a well-established e-commerce presence and currently represent about 44% of total online sales – computer equipment, apparel, and consumer electronics.

While one can debate the specific numbers when it comes to measuring and projecting e-commerce volumes  4 years from now, the trend is clear. Retailers must establish an e-commerce presence and use online marketing strategies to ensure future growth.
[Sources: The 2009 U.S. Digital Year in Review. comScore. February 2010. Web. 9 March 2010; Forrester Forecast: Double-Digit Growth For Online Retail In The US And Western Europe. Forrester.com. 8 March 2010. Web]

To understand the full extent of the recession in the U.S. consider the 2% drop in  e-commerce spending in 2009. Total spending for the year leveled out at $209.6 billion and was broadly divided between travel e-commerce spending at $79.8 billion and retail e-commerce spending at $129.8 billion according to comScore.

A closer look at the details reveals reason for optimism for 2010. For example, while e-commerce spending dropped during the summer months of 2009, spending increased in November and December and that momentum is expected to carry into 2010.

Categories with the best growth rates and those that might therefore continue on a positive trajectory in 2010 include:

• Books & magazines
• Computer software (not PC games)
• Sports & fitness items
• Jewelry & watches
• Video games, consoles & accessories

The comScore study also noted that a ChoiceSteam survey might reveal one reason for the drop in e-commerce spending. Nearly 6 in 10 survey respondents did not find high quality product recommendations on retailer web sites. Consumers listed the following problems with recommendations that many have come to rely on:

• Recommendations did not relate to their search 54%
• Recommendations did not match their preferences 49%
• Recommendations were inappropriate 46%

Given these details, it’s a safe bet that marketers will be tweaking their Web sites and looking to use comments effectively for the 2010 shopping season.

[Source: E-commerce Spending Falls First Time, comScore, February 2010]

While the recession took a toll on shopping centers and strip malls across the country, the economic downturn has left the Internet poised to enter 2010 as a larger force in retail.  Bargain seekers are turning to the Internet in droves to compare prices, hunt for bargains, download coupons and seek advice from fellow shoppers. Retailers are taking notice and are beginning to divert capital away from storefronts and to Web sites, investing in the technology to make online shopping easier, faster and cheaper.

There was a time when big brick-and-mortar retailers looked at their online divisions as less important, figuring stores should receive most of the company’s resources and attention because they generate the bulk of the sales.  However, traditional chain stores are starting to realize that the benefit of an online store reaches far beyond the dollars generated by selling merchandise.  Web sites are a treasure trove of information about shopping behaviors and purchasing preferences. Retailers can track what each customer buys and use that information to target discounts and suggest products, said Lauren Freedman, president of E-tailing Group Inc. in Chicago.

“There’s no question the Internet has gone from being a curious sidebar to a main event,” said Mark Cohen, marketing professor at Columbia Business School in New York and former chairman and CEO of Sears Canada Inc. “Customers are becoming completely comfortable with doing business on the Net. … This year is going to be a very good year for online shopping, tempered only be the negative effect of the economy.”

Some analysts believe that Internet sales reached a turning point over the holidays; online sales rebounded to post a 5% gain from Nov. 1 through Christmas Eve, ComScore said. The strong finish bodes well for 2010, as online sales are expected to return to “reasonably healthy growth rates” this year.  Online data firm Forrester Research said the Web influenced $937 billion in U.S. store sales in 2009, a figure projected to reach $1.3 trillion by 2013, or about one-third of total retail sales.  And according to Credit Suisse Securities LLC, e-commerce sales will rise nearly 10% in 2010 to $144 billion after ending 2009 with an estimated 1.1% gain, the worst year on record.

“Internet poised to become bigger force in retail,” Jones, Sandra.  The Chicago Tribune, January 6, 2010.

US online advertising spending is set to drop in 2009 for the first time since 2002. eMarketer estimates online ad spending will be down 4.6%.  However, the slowly recovering economy, combined with basic structural changes in how marketers and the public use media, will lead to Internet ad spending growth in early 2010.

“The economic cycle has reached bottom—at least for the online ad industry,” said David Hallerman, eMarketer senior analyst and author of the new report, “US Ad Spending.” “While spending in the first three quarters of 2009 fell by 5.3%, according to the Interactive Advertising Bureau and PricewaterhouseCoopers, eMarketer’s estimates indicate a smaller loss during Q4, of 2.5%.”

The various components of online advertising react differently to cyclical and structural changes. While one format might show relatively healthy growth in the recession, another suffers due to the same economic climate. For example, paid search will grow by 2.2% in 2009, while classified ad spending will decline by 30.2%. Even during 2010 and 2011, eMarketer projects search will continue to grow at mid-single-digit rates, while classified spending will decrease again both years.

Video ad spending growth will far outpace any other online format, running in the 34% to 45% range from 2009 through 2014. These extremely high growth rates are the result of video ads moving from the sidelines to center stage, becoming the main form of brand advertising in the digital space.

“US Ad Spending,” conducted by eMarketer, December 11, 2009.  Website: www.emarketer.com.