95% of the orders at Hallmark Business Connections are processed online, CEO Tressa Angell says.
Online sales made a noticeable comeback in January, rising 2% from a year earlier and gaining share of consumer spending as total retail sales fell 5.8%. That compares to a tough fourth quarter of 2008, when online sales fell 5.8% year over year as total sales dropped 8.6%.
Coming off a tough 2008, e-commerce made a relatively strong comeback in January, rising 2% from a year earlier to $10.87 billion, according to comScore Inc.
Overall retail sales, excluding automobiles and auto parts, declined 5.8% in January, according to a preliminary report from the U.S. Commerce Department.
“E-commerce is outperforming on a relative basis the rest of the retail sector,” comScore chairman Gian Fulgoni said last month. “E-commerce clearly continues to gain share of wallet.”
Fourth quarter 2008 online sales fell 3% from the year-earlier quarter, but rose 6% for the year-off the steady double-digit increases of the past several years. In contrast, total retail sales fell 8.6% for the fourth quarter and 0.6% for the full year, according to the Commerce Department.
The relative strength in online growth is expected to continue, but retailers should be aware of several trends, Fulgoni says.
Upper-income consumers, for example, have reduced the growth in their online spending. In Q4, consumers with income of $100,000 and greater spent 17% more online than they did in Q4 a year earlier. In January, growth in that segment was 8%.
In addition, those same consumers indicated they are cutting back their spending. ComScore asked its consumer panel about spending plans in October and again in January. In October, 67% of $100,000+ households said they were cutting back their spending; that increased to 78% in January.
Consumers with $50,000 to $99,999 in household income, however, increased their online spending in January by 2%, after having decreased online spending by 10% in the fourth quarter.
ComScore data also shows that the state of the economy has made consumers more budget-conscious. In December online search activity related to coupons was up 157% over a year earlier and traffic to online coupon sites was up 46%, Fulgoni says. In addition, 76 million Internet users shopped at comparison sites in December versus 72.4 million a year earlier.
Fulgoni also reports an interesting swing in sales share by retail segment. In Q4 2008, 48% of online sales took place at sites operated by multi-channel merchants as opposed to web-only merchants. That proportion contracted to 44% in January. “It might present an opportunity to build business by increasing their focus on online throughout the year,” he says.