E-Tail Flatline Shows (Some) Signs of Life

Gian FulgoniConsumers' resolve to recover wealth lost during the current recession represents the single greatest threat to U.S. e-commerce, according to comScore Chairman Gian Fulgoni.

"Until they regenerate a significant portion of their wealth, I worry we are not going to see a rebound," Fulgoni said during a presentation on Thursday. "Whether we are in a transformation (period), or we are going to go back (to previous consumer spending habits) -- it's the issue I worry about most."

In the first quarter of the year, online retail spending remained flat year-over-year, while travel e-commerce was down 1%, according to new comScore data.

Still, "this does represent a slight improvement over the disappointing fourth quarter," said Fulgoni. "These results would appear to indicate that the economy is finally exhibiting some signs of stability, and with consumer confidence beginning to improve, I'm optimistic that the online channel is poised for a return to positive growth in the second half of 2009."



More specifically, Fulgoni predicted something in the neighborhood of 5% growth. "I don't think we're going to see double-digit growth rates."

The fastest-growing category in the first quarter was sport and fitness, which continues to grow as consumers demonstrate a willingness to purchase major fitness equipment -- such as treadmills and stationary bikes -- online.

Books and magazines, meanwhile, grew 19%, followed by video games, consoles and accessories as well as computer software, which each grew 12%, respectively.

Overall, however, "we remain in a situation where the consumer is still very uncertain about their economic future," Fulgoni said. "The job situation is the number one concern."

In March, for one, online searches for the phrase "unemployment benefits" were up a full 367% year-over-year, according to comScore, while searches for the word "unemployment" were up 210%.

What's more, searches for the word "coupon" increased 90% year-over-year.

Along with older consumers, wealthier consumers are showing a general reluctance to return to looser spending habits, comScore found.

Indeed, while households taking in less than $50,000 a year predictably decreased e-commerce spending in the first quarter -- by 10% year-over-year -- those taking in $50,000 to $99,000 and more than $100,000 only increased spending 2% and 3%, respectively.

"I am nervous about the savings rate," reiterated Fulgoni. "I suspect that this is going to stretch out the recovery."

Separately, April saw Americans turn to the Web for the latest information related to the swine flu, causing traffic to soar at CDC.gov, according to new data from comScore Media Metrix.

The month also saw visits to social networking sites reach record numbers, driven by growth at Twitter.com and Facebook.com, as well as an increase in visits to real estate and home-related sites as the spring season prompted many Americans to consider home improvements.

The tax category also experienced strong growth as procrastinating Americans tried to beat the April 15 deadline.

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