September 29, 2009, 12:00 AM

42% of e-retailers increased their conversion rates this year, study says

A new Shop.org report conducted by Forrester Research says 42% of online retailers increased their online visitor-to-order conversion rates during the first half of this year compared to the same period last year, to an average conversion rate of 3.4%.

Katie Evans

Managing Editor, International Research

A new Shop.org report conducted by Forrester Research Inc. says 42% of online retailers increased their online visitor-to-order conversion rates during the first half of this year compared to the same period last year, to an average conversion rate of 3.4%.

The report, “The State of Retailing Online 2009: Profitability, Economy and Multichannel,” written by Sucharita Mulpuru, Forrester’s principal analyst for retail e-business, also notes that retailers in the study reported an average growth rate of 18% in 2008 web sales over 2007, and that 50% of online retailers surveyed during the first half of 2009 said they expect sales to be better than initially expected during the next 12 months.

This is the third and final part of "The State of Retailing Online Report." The other two sections, on marketing and merchandising, were released in June and August. Shop.org is the online retail division of the National Retail Federation, an industry trade group.

Among other data, the report also notes that 87% of online retailers said their e-commerce operations were profitable last year. Of this group, 57% said their e-commerce operations were more profitable in 2008 than in 2007; 21% said they were less profitable, and 21% cited no change.

When the study asked online retailers whether they thought sales through the first half of 2010 would meet initial expectations, 7% said they expected sales to be substantially better, 43% slightly better, 33% the same, and 17% slightly worse.

Following are additional data points from the study, showing the percent of surveyed retailers choosing each option:

Strategic moves used to compete within the past year
Preserving profit margin, 91%
Increased promotions, 88%
Focusing on profitable transactions and customers, 86%
Increasing value messaging, 84%
Building market share, 81%
Preserving market share, 81%
Matching prior year revenue, 80%
Increased shipping promotions, 72%
Increased cross-channel promotions, 61%
“Daily deal” offers on the web, 47%
Lowered prices, 53%
In-store online ordering, 34%
Buy online/pickup in-store, 27%
Free return shipping, 18%

Performance results first half 2009
Site conversion rate, 3.4%
Shopping cart abandonment, 51%
Average order value, $183
Returns as % of total orders, 7%
Number of items per order, 3
Total online sales from repeat customers, 28%
Customers returning to buy within 12 months, 24%
Revenue from shipping, 6%
Marketing cost per order, $14.30
Fulfillment cost per order, $4.30
Customer service cost per order, $8.15
Orders cancelled, 2.7%
Orders held for fraud, 1.3%
Revenue from gift cards, 1.6%
Download time, 2.3%
Web site availability, 99%
First page bounce rate, 27%
Number of items on site, 599,666
Number of SKUs per item, 4

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