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The ill wind of high gasoline prices blows some good to online retailers
First quarter web sales rose nearly 12% year over year, making it the second consecutive quarter of double-digit growth and sixth quarter in a row of year-over-year growth. U.S. web sales reached $38 billion in Q1, up from $34 billion a year earlier.
Online retail sales increased nearly 12% in the first quarter of 2011 from the same period a year ago, making it the second consecutive quarter of double-digit growth and sixth quarter in a row of year-over-year growth, according to web measurement firm comScore Inc. E-commerce sales in the U.S. totaled $38.00 billion during the quarter versus $33.98 billion in Q1 2010, comScore says.
The number of online buyers grew 7% and transactions per buyer increased 9%, but the average dollar value of an online purchase declined 4%, comScore says. ComScore compiles its data by tracking the online spending of some 2 million consumers who have given their permission to be monitored, about half of them in the U.S.
Industry experts say high gasoline prices led more consumers to shop online during the first quarter. The average price for a gallon of gasoline is up more than $1 from a year ago, according to the U.S. Energy Information Administration. More than 28% of U.S. consumers say they are shopping online more because of rising gas costs, according to a survey conducted for Internet Retailer by Synovate, a market research firm.
"Faced with rapidly rising gas prices and stubbornly high unemployment, consumers continued to take advantage of the Internet's lower prices by shifting their spending from offline retail stores," says comScore chairman Gian Fulgoni.
Sales data and some e-retailers' quarterly reports indicate more consumers are going online to purchase everyday packaged good products, such as soap and food, and consumer electronics. Consumers spent approximately $15 billion online for packaged goods products in 2010, 10% more than in 2009, comScore says. It adds that about 50% of all computers and 30% of all consumer electronics bought in the United States are now purchased online.
During the first quarter, Amazon.com Inc., with total Q1 web sales of $9.86 billion, registered especially strong gains in North America in electronics and general merchandise, which increased 63% to $3.30 billion from $2.02 billion. Part of those gains come from Amazon's late 2010 acquisition of Quidsi, parent company of Diapers.com, Soap.com and other e-retail sites, which was on track to generate $300 million in annual revenue last year.
Amazon's sales in the U.S. and Canada increased 44.6% to $5.47 billion in the first quarter from $3.78 billion in the same period last year. The company also reported 51% growth year over year in units sold. Amazon chief financial officer Thomas Szkutak says the unit growth largely reflected growth in the sale of digital content, such as electronic books for Amazon's Kindle reader.
Netflix Inc. also attributes sales growth to its digital delivery service. The movie rental service said in January that more than one-third of its new subscribers signed up for the pure streaming plan, which means they do not receive discs in the mail. The company reported sales grew 45.5% to $718.6 million during the first quarter, up from $493.7 million a year ago.
Several retail chains reported that web sales grew much faster than total sales in the first quarter. E-commerce at Gap Inc. grew 18% in the quarter to $348 million, while total sales declined 1% to $3.29 billion. Web sales at Williams-Sonoma were up 20.8% to $290 million in the quarter, while total sales grew 7.4% to $718 million.
Kohl's Corp. CEO Kevin Mansell says he expects web sales to pass the $1 billion mark for the first time in 2011. During the first quarter, e-retail sales for Kohl's were up 41.7% year over year to $187 million, whereas total sales rose 3.2% to $4.16 billion.