• by Jack Loechner , Staff Writer @mp_research, April 17, 2008

Paid Search To Acquire, and Email To Retain, Online Retail Customers

According to a new report released by trade group Shop.org, conducted by Forrester Research, online sales excluding travel are expected to hit $204 billion in 2008, an increase of 17% over last year. The top three categories will be apparel at $26.6 billion, computers at $23.9 billion and autos at $19.3 billion, according to The State of Retailing 2008 Marketing Report.

Online commerce is expected to account for 7% of all retail sales in 2008, and will top $300 billion in five years, the report said. In addition, 53% of online retailers' marketing budgets are spent on customer acquisition compared to 21% spent on retention.

The top customer acquisition tactic for online retailers is paid search, which accounts for 35% of new customers on average, according to the study.

The second highest source, attracting 18% of the new customers, is Organic Web traffic. Affiliate programs and e-mail were tied for third place, accounting for 7% each, according to the study.

Though paid search is the top acquisition tool, e-mail to house files is the top online marketing tactic as 92% of online retailers said they use it. 79% say Paid search will be an increased priority this year.

Nearly half of online retailers said they send print catalogs and 46% said they plan to make them an increased priority in 2008, the study said.

Online retailers report popular promotional tactics in this order of preference:

• 85% say they use free shipping with conditions, with it, the study said
• 82% use percent-off promotions with saying they use it
• 69% prefer dollar-off promotions
• 68% like gift with purchase
• 67% support online-only sales

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