September 14, 2009, 12:00 AM

Reports on sales increases offer hope that the recession may be ending

A couple of service and technology vendors to the e-retailing industry have reported encouraging sales news recently, although with the caveat that they don’t know if this is a long-term trend or just a blip.

Katie Evans

Managing Editor, International Research

A couple of service and technology vendors to the e-retailing industry have reported encouraging sales news recently, although with the caveat that they don’t know if this is a long-term trend or just a blip.

ChannelAdvisor Corp., which provides services that help e-retailers sell on eBay, Amazon and other online marketplaces and provides search engine marketing services, notes that ChannelAdvisor customers selling on eBay experienced 4.6% growth in merchandise sales from August 2008 to August 2009. This figure applies only to stores that were selling on eBay at both times-which ChannelAdvisor calls “same-store sales.” It’s the first time in many months that same-store sales for eBay sellers using ChannelAdvisor have been positive, says Scot Wingo, ChannelAdvisor CEO.

Q1 same-store sales for eBay sellers were down 10% from the year-ago period and Q2 sales were down 5%. “It`s interesting to see a pretty material swing here,” Wingo says in the ChannelAdvisor blog entry on this topic.

Whether it’s a sustainable trend is unclear. “It`s too early to call if this is a one-time blip or if we`re seeing a trend that indicates eBay has turned the corner,” Wingo says. “We`ll be keeping an eye on September and how things play out.”

In addition, Wingo tells Internet Retailer that ChannelAdvisor’s customer base is different from the eBay universe, in that ChannelAdvisor customer are 25% non-domestic while eBay’s overall base is 55% non-US. In addition, he notes that ChannelAdvisor customers are under-represented in jewelry and books/music/videos compared to the eBay base, but heavier in consumer electronics, apparel, home and garden and sporting goods.

There are several possible explanations for the growth, Wingo reports, including the fact that sales in the second half of last year were so dismal that year-over-year comparisons become easier.

He also notes that eBay’s fixed-price offerings are growing at a strong rate (40% year over year). “Sellers have finally gotten the message and are moving their business models to the fixed-price format and abandoning the auction format in wholesale,” he observes. “The scale of the fixed-price business is now large enough to start to move the needle on same store sales.”

He adds that search engine Bing’s cashback promotion involves eBay and that eBay appears to be doing more marketing.

E-commerce platform provider Warp 9 Inc. reports that its customers as a group experienced 20% growth in sales in the second quarter from the year-ago quarter. In the first quarter, growth was 12% year over year.

Warp 9 says customers have experienced greater page exposure through search engines and significant growth in sales and traffic driven by search engine optimization.

Those online retailers are experiencing strong growth partly as the result of competitors pulling in their horns as the economy deteriorated, Harinder Dhillon, CEO of Warp 9, tells Internet Retailer. “Because of the economic contraction, a lot of retailers pulled out of engagement activities due to shrinking budgets, smaller staff, etc.,” Dhillon says. “This created a vacuum-which in turn created an opportunity.”

That opportunity is materializing as consumers become less panicky about the state of the economy. “Now with consumer sentiment rising, those retailers that stayed engaged or have the capabilities to easily re-engage and measure results in those channels are reaping the benefits of being in a less crowded space both for competition of consumer dollars and in brand impressions,” he says.

The growth in SEO-generated traffic and sales is the result of tighter spending on pay-per-click search engine marketing. “Due to the pullback in competition in paid forms of advertisement, SEO presence is more important and wins more proportional sales,” Dhillon says.

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