December 15, 2009, 12:00 AM

Web retailers sold more but sacrificed margin last month, MyBuys study says

Online retail sales were up 4.4% in November, but sales of discounted items were up more than 120% over the previous November, and the depth of discounts increased to just over 26%, according to research conducted by MyBuys for Internet Retailer.

Online retail sales were up 4.4% in November, but the economic health of online retailers was down 1%, according to a monthly study of 150 e-retailer clients of MyBuys Inc. that the personalization technology firm conducts exclusively for Internet Retailer.

Revenue was not “healthy” because sales of discounted items in November were up more than 120% over the previous November and the depth of discounts increased to just over 26% in November 2009, up from a discount level of 24% last year, according to the MyBuys E-commerce Wellness Index.

The index seeks to measure the health of e-retailing by aggregating total sales, non-promoted sales, discounted sales performance, depth of discounts and average order value from the product recommendations technology vendor’s more than 150 retail clients across numerous product categories; 40 of the merchants are in the Internet Retailer Top 500 Guide. The E-commerce Wellness Index also measures consumer impulse response to product recommendations by tracking how many shoppers click on recommendations and how many buy them.

In addition to sales of discounted items and the depth of discounts being up, online retailers in November saw revenue drop 3.4% on non-promoted goods from the same period one year prior. Taking these factors into account, the overall industry health as measured by the MyBuys E-commerce Wellness Index was down 0.9%.

“Based on the trends we’re seeing, retailers will be challenged to maintain top-line growth if they wean themselves too quickly from the discount-driven strategies that were prevalent in 2009,” says Robert Cell, MyBuys CEO. “To counter this, retailers must shift their focus to strategies that encourage full price purchasing, such as targeting newly released products at relevant shoppers with a high propensity to buy.”

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