US Online Sales Up
In dark days, e-commerce shines. — Most US economic indicators were down in Q1 2009, but online sales were an exception. — According to a survey by Forrester Research and Shop.org, US online retail sales rose an average of 11% in the first three months of 2009.
Context & Ripple Effects
This is at least the second time in four years that US e-commerce has posted strong growth while the wider economy struggled — the holiday-season internet sales gains reported at the end of 2005 showed the same divergence between online and offline retail. What is different in April 2009 is the severity of the backdrop: most US economic indicators fell in Q1 2009, making the 11% average rise measured by Forrester Research and Shop.org a share-shift signal rather than a simple growth story.
Forrester is also the firm that sized troubled financial firms at roughly 2% of total tech spending back in September 2008, so its read on where demand survives a downturn carries weight with retail and technology buyers alike.
First-order effects
- Retailers with established web channels capture spending that shrinking store traffic can no longer deliver, while merchants still dependent on physical locations lose relative ground in Q1 2009.
Second-order effects
- Brick-and-mortar chains facing falling same-store sales are pushed to redirect budget into e-commerce platforms, fulfillment, and online marketing to defend share against pure-play competitors.
Third-order effects
- If each downturn converts a cohort of shoppers to online buying habits they keep after recovery, recessions structurally raise e-commerce's share of US retail with every cycle — the pattern the 2005 holiday data already hinted at.
The trend: US e-commerce keeps growing through economic downturns, steadily taking retail share from brick-and-mortar in every cycle rather than only in expansions.