Online retailers
have begun to feel the sting of the weakening economy, as consumers are pulling back on discretionary spending to offset the rising costs of necessities, according to comScore.
Gas
prices, for example, have risen by about 21% year-over-year, according to government-provided statistics. In contrast, online retail growth (not including travel, autos or auctions like eBay) has
sharply decelerated. Online retail growth was just 12% in the first quarter of 2008, in contrast to 21% for the same quarter in 2007.
To ride out the downturn, comScore's top brass said that the
free shipping deals, personalization offers and other perks that e-tailers typically use to entice shoppers should take a backseat to price-based promotions.
"People are using shopping engines
and going back and forth between Web sites to compare prices," said Magid Abraham, comScore's founder and CEO. "There's higher price sensitivity than in previous years, and a lot of churn before
people actually buy. So price has become a much bigger element of the strategy."
Abraham shared data from an April survey of 1,000 U.S. comScore panelists, and found that some 76% said that the
Web would be either "somewhat" or "a lot" more important as a tool for finding pricing info in the coming months. And consumers are increasingly turning to comparison-shopping engines to find the best
prices, as in the first quarter of 2008, queries on sites like Become.com and NexTag were up 16% year-over-year.
Consumer purchase patterns are also showing the trend toward increased price
sensitivity. For example, comScore found that sales in the high-end retail category (sites like Bloomingdales.com and AmericanGirl.com) were down 8% in the first quarter of 2008. Meanwhile, sales on
discount (like Wal-Mart), mid-tier (including Amazon and HP.com) and club retailer sites (like Sam's Club) were all up for the quarter. In fact, club and discount sites in particular showed promising
growth, up 37% and 19%, respectively.
"Even certain consumers that would typically shop at the high end are reallocating their dollars to stores with lower prices," said comScore Chairman Gian
Fulgoni. He added that the shift was not stemming from a loss of traffic, as visitation to e-tailer sites was up in all price segments. "This indicates that conversion levels and average basket sizes
are down," Fulgoni said. "Which means that high-end online retailers, in particular, need to focus more on driving conversions and spend per visitor."