November 17, 2009, 12:00 AM

Web sales up 12.6%, but where are those sales coming from?

From discounted items, that’s where. And that doesn’t make for tremendously healthy sales, according to a new monthly study of 150 e-retailer clients of MyBuys that the firm conducted exclusively for Internet Retailer.

When it comes to online sales, it looks like things may be bouncing back a bit. In October, e-commerce sales increased 12.6% over October 2008, according to a new monthly study of 150 e-retailer clients of MyBuys Inc. that the firm conducted exclusively for Internet Retailer.

But the relative health of these businesses rose only 0.2%, according to the MyBuys E-commerce Wellness Index, which determines the health of e-retailing by aggregating total sales, non-promoted sales, discounted sales performance, depth of discounts and average order value from the product recommendations technology vendor’s more than 150 retail clients across numerous product categories; 40 of the merchants are in the Internet Retailer Top 500. The E-commerce Wellness Index also measures consumer impulse response to product recommendations by tracking how many shoppers click on recommendations and how many buy them.

So in October, even though total sales were up by 12.6% year over year, the industry’s health was little changed from a year ago because total sales owed so much to discounted items, sales of which were up 112%, and because the depth of discounts increased from an average of 24.6% in October 2008 to 28% this October. Online retailers saw sales drop 2.6% on non-discounted goods from the same period last year.

“We continue to see a consistent theme of increased sales, with all-or close to all-of the increase attributable to the sale of discounted goods,” MyBuys CEO Robert Cell tells Internet Retailer.

“The bright spot is that product sales based on personalized recommendations were discounted substantially less often than those that were not,” Cell says of the e-retailers, all of which offer personalized product recommendations.

In October, the E-commerce Wellness Index showed that retailers discounted 68% less on personalized offers than they did on non-personalized offers. “Merchandisers have always known that relevancy matters,” he adds. “When product recommendations are relevant, consumers simply purchase more.”

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