August 31, 2011, 10:48 AM

In a tough economy, e-commerce shows its strength with a 17.5% Q2 rise in web sales

U.S. e-commerce sales reached $47.5 billion in the second quarter, up 17.5% from $40.42 billion a year earlier, according to the U.S. Department of Commerce.

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Even with continuing weakness in the U.S. economy, retail e-commerce sales continued their strong march through the second quarter. U.S. e-commerce sales from April through June reached $47.5 billion, up 17.5% from $40.42 billion a year earlier, according to seasonally adjusted estimates released last month by the U.S. Department of Commerce.

E-commerce accounted for approximately 4.6% of total retail sales excluding food service during the second quarter, its highest level on record, the Commerce Department says. Total adjusted retail sales excluding food service during the second quarter reached $1.04 trillion, according to the report. E-commerce accounted for 4.5% of total retail sales during the first quarter of 2011, and 4.2% during the second quarter of 2010, the Commerce Department says.

When excluding sales in other categories not commonly bought online—automobiles, fuel and grocery—Internet Retailer calculates that e-commerce accounted for 8.4% of total retail sales during the quarter, up from 7.3% a year ago.

The Commerce Department numbers are higher than e-retail sales and growth estimates released last month from comScore Inc. The web measurement firm reported consumers spent $37.5 billion with web retailers during the second quarter, up 13.6% from $33.0 billion a year earlier. ComScore uses online purchase data from a panel of about 1 million U.S. online shoppers and excludes automobile and auction sales. Commerce Department estimates are based on a quarterly survey of more than 11,000 U.S. merchants, and include web auctions.

Retailers watch expenses

While April-through-June total e-commerce and retail sales were up from a year ago, some retailers are likely to carefully watch their expenses and inventory levels given the recent swings in the stock market and continued economic uncertainty.

For instance, Saks Inc. forecast last month that it would raise inventory levels by a mid-single-digit percentage during the second half of 2011 compared with the same time a year ago, while it expected store sales to rise at a slightly higher rate. Keeping a tight rein on inventory levels would help prevent the retailer from having to cut prices to move excess inventory should the economy remain volatile. Saks Direct, the e-retail arm of Saks Inc., is No. 38 in the Internet Retailer Top 500 Guide.

"We are approaching the fall season a bit more cautiously and will continue to be very strategic with our expense, capital and inventory spending," says Stephen Sadove, CEO of Saks, where online sales were up 50% during the second quarter from a year ago, and bricks-and-mortar comparable-store sales were up 15.5%.

There are also signs that shoppers are spending less individually, however, giving retailers more reasons to plan carefully heading into holiday season.

The number of U.S. online purchases in the second quarter hit 539 million, up 22.5% from 440 million in the same period last year, as the average number of transactions per buyer increased 6.7% in the quarter, to 3.2 from 3.0, comScore says.

But comScore also notes that consumers spent less per transaction, resulting in a 6.7% drop in Q2 average order value, to $70 from $75. m

allison@verticalwebmedia.com

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