Amazon.com.mx previously has sold Kindle e-books since its launch in 2013.
Showing the strength of e-commerce, nearly 5,000 attended the Internet Retailer Conference & Exhibition in June.
A trade show can provide a good gauge of the health of an industry. And the message delivered by the 2009 Internet Retailer Conference & Exhibition was that online retailing remains strong, despite the recession.
Nearly 5,000 attended the four-day event in Boston in June, just a hair below the attendance at last year’s pre-recession IRCE in Chicago. In a year when many trade shows were much smaller than in the past, IRCE turned some heads.
“As a frequent presenter at trade shows and conferences I was absolutely amazed at what Internet Retailer was able to achieve in Boston,” said Eric T. Peterson, founder of consulting group Web Analytics Demystified, author of a book by that name and a speaker at IRCE. “While many conferences are struggling in 2009, Internet Retailer was packed with great brands, great vendors and totally engaged participants.”
Over the four days of the conference, those participants took advantage of 91 sessions, 18% more than IRCE 2008, and heard from 173 speakers, a 20% increase from last year. Attendees garnered insights on such nuts-and-bolts topics as site navigation, handling returns and e-mail marketing as well as on such leading-edge issues as personalization, social marketing and mobile commerce.
To be sure, speakers made clear that the recession has impacted online retailing-and likely will for some time to come. Keynote speaker Patrick Byrne, chairman and CEO of online discount retailer Overstock.com Inc., told attendees that fresh capital will be hard to come by in the near term, and that will lead to industry consolidation.
Byrne urged attendees to cut costs, including by reducing inventory, outsourcing technology services and keeping a close eye on marketing expenses. “I wish I could take our marketing guys and staple a bookkeeper to each of them,” he said.
Gian Fulgoni, chairman of comScore Inc., which measures web activity and e-commerce, provided data showing the ongoing effect of the downturn. He noted that e-commerce grew by 1% in the first quarter of 2009, while overall retail sales were flat, meaning the web gained some share of retail sales. But online retail sales slipped 4% in May, the last month for which data was available, which Fulgoni said could be attributed to e-retailers discounting less once they had sold off excess inventory.
Fulgoni highlighted a pullback early this year in online shopping by older consumers: Those over 45 in households with income of $50,000-100,000 reduced online spending 11% in the first quarter, while those 18-44 spent 15% more online; in above-$100,000 households, spending by those 44 and under increased 8% in the first quarter, while there was no growth in purchases by those 45 and older.
“Older people are trying to rebuild wealth, they have kids going to college and they’re concerned about retirement,” Fulgoni said. “The question is: How long will it continue. If it does, we could see stagnant growth for e-commerce.”
But, even in a depressed economy, some categories of online retailers are doing better than others, pointed out Jack Love, publisher of Internet Retailer magazine, who presented data from the annual Internet Retailer Top 500 Guide that tracks the 500 leading online retailers in North America by revenue. Web-only retailers in the Top 500 increased online sales by 21% in 2008 and consumer goods manufacturers by 15%, while retail chains gained only 8% and catalogers’ web sales went up 5%, Love reported.
Manufacturers produce results
The Internet-only category was boosted by the relentless growth of Amazon.com, whose share of online retail sales grew last year to 10.8% from 8.7% in 2007. Love attributed that growth to Amazon expanding into new merchandise categories, investing in technology and maintaining its fierce competitive drive.
Manufacturers, he noted, are investing more heavily in the web as their profit margins are squeezed by giant chains like Wal-Mart Stores Inc. Manufacturers’ profit margins are higher online where they sell directly to consumers, Love observed.
Overall, Love noted, online retailing gained market share, growing 4.6% in 2008 while total retail sales went up only 1.4%. Still, that’s a far cry from the 20%-plus growth rates that online retailing had been posting for the last several years. “The easy growth is over,” Love concluded.
But, he added, “Recessions do not last forever. When it’s over, a rushing wind of e-commerce will blow through the retailing market once again. Those who have invested in technology, those who have become No. 1 at something, those who are aggressive in marketing even in a recession, will be the players who inherit this wind.”
The winds of change are already blowing, as was evident in several presentations that highlighted how e-commerce players are adapting to market conditions.
A prominent example is eBay Inc., the iconic online auction site that has reported declines in merchandise sales in recent quarters. EBay has embarked on a new strategy of building sales by providing a platform for larger retailers to dispose of excess and out-of-season inventory. “EBay is moving upmarket,” Stephanie Tilenius, senior vice president and general manager of eBay North America, told IRCE attendees in a featured address.
She described several changes meant to accommodate major retailers, including last year’s launch of eBay’s Large Merchant Services program, in collaboration with technology vendor Mercent, that makes it easier for retailers to sell large quantities on eBay. Site search has been upgraded, the fee structure revised to benefit merchants selling at fixed prices, and eBay is testing coupons and a cash-back offer and is working to resolve disputes quickly with good customers, Tilenius said.
“EBay is a company in transformation,” she said, and promised more changes in the fall.
Just as eBay is adjusting to consumers’ declining interest in online auctions, so, too, catalogers are changing their strategy as more sales move to the web. That was illustrated in a presentation by Tracy Schneider, vice president of e-commerce at CWDKids.com, who noted that the company mailed only 12.4 million catalogs last year, down from 15.6 million in 2003, and plans to reduce that number to 10 million by 2010.