November 17, 2010, 10:44 AM

A healthy Q3 for online retail

E-commerce spending increased 13.7% in Q3, the U.S. Commerce Department says.

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E-commerce sales increased nearly 13.7% during the third quarter from the same period a year ago and captured 4.2% of total retail sales, a new record for e-commerce, according to estimates released today by the U.S. Commerce Department. Total seasonally adjusted Q3 e-commerce sales reached $41.53 billion, up from $36.54 billion from the same period last year. E-commerce sales for the third quarter also increased 4.0% from the second quarter this year, when sales stood at $39.94 billion.

Q3 marks the fourth consecutive quarter of double-digit growth for e-commerce, although the 13.7% growth rate is lower than the previous three quarters during which growth averaged 14.5%. However, it was during the third quarter of 2009 that e-commerce first posted positive growth (1.6%) after several quarters of reduced consumer spending.

The 13.7% growth rate for e-commerce sales also is more than double that of total retail sales, which posted 6.0% growth during the third quarter. The U.S. Commerce Department estimates seasonally adjusted total retail sales during the third quarter were $978.73 billion.

“The data underscores yet again the secular shift from offline to online spending,” says Colin Sebastian, an analyst for Lazard Capital Markets. “Despite some lingering macro-level hesitation on consumer spending, e-commerce companies should feel good about this year and the return to growth.”

When excluding sales in categories not commonly bought online—automobiles, fuel, grocery and foodservice sales—Internet Retailer calculates that e-commerce accounted for 7.5% of retail sales during the quarter. This is up slightly from the second quarter, when Internet Retailer calculated e-commerce accounted for 7.3% of sales in categories where web retailers typically compete with bricks-and-mortar stores.

The numbers come as no surprise to e-commerce executives. “The growth numbers are very consistent with the type of online growth we are seeing with our customers,” says Bill Zujewski, vice president of product marketing at ATG Inc., an e-commerce platform and technology vendor. 43 of the e-retailers listed in Internet Retailer’s Top 500 Guide are ATG customers, including Amazon (No. 1), Best Buy (No. 10) and J.C. Penney (No. 16).

Zujewski says e-retailers have improved the online shopping experience to the point where the benefits of buying online outweigh those of traditional retail. “E-commerce sales are accelerating because online sellers are providing a much richer and more effective user experience that includes richer product information, ratings and reviews, recommendations, video and buying guides,” he says. “These features reduce the need to go to the brick and mortar store. Moving forward, companies should continue to drive even more growth by advancing the online experience.”

 

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