Online retail spending slows to a crawl in October

Consumer spending on e-commerce sites grew just 1 percent during October compared with the same month a year ago, according to ComScore.

In fact, last month was the worst growth month for online retail spending since ComScore began keeping track in 2001.

Rising prices and unemployment rates, and the psychological impact of the chaos of the financial markets are to blame, according to ComScore Chairman Gian Fulgoni.

But the dip in spending can't be too much of a shock to those who watch ComScore's monthly reports carefully. The preceding six months featured declining growth rates--April saw 15 percent growth, and by August spending online had increased just 8 percent.

Spending has dropped off the most for households that make below $50,000 per year, according to ComScore's figures. From August to October this year, their spending dropped 3 percent compared with the same period last year. For households making between $50,000 and $100,000, their spending increased 1 percent. Households making more than $100,000 increased their spending during that time by 14 percent.

Retailers both online and off are fretting how the economic downturn will affect this year's holiday sales. E-commerce giants Amazon.com and eBay both offered dim holiday outlooks during their third-quarter earnings reports.

In response, earlier this month ComScore recommended that online retailers should seriously consider generous coupon offers and free shipping to encourage consumers to spend in the coming months.

[john94857]

That's really not too surprising. I have also read a short but interesting article about how this Black Friday will be different comparing to the past, and all the reasons behind it. It's very relevant to October's retail sales too. If you are interested, the article is at http://www.uberi.com

Anyway, as a family, we are tightening our belt and try not to over spend as the article implies and the sales reflect that.

[C-M-D]

Some of the things plaguing online sellers are fees (sorry eBay), lack of innovation (still the same eBay), and less control (think facebook's site update that was protested).

Part of what lean-times call for are stripped-downed processes. Part of the innovation and new ideas constantly being called for will address the turmoil (if that's where we are) and launch us into new directions.

Our company is doing just that: innovating, cutting costs, and giving control to the users. See http://netspray.com/ We see the future: see you there?

[humanssssss]

There are two camps, one camp says to live within your mean. Don't spend what you don't have. The other camp says, spend, spend so you can help the economy. If you want people to keep spending, give them more credit. After they maxed it out, they filed for bankruptcy.

[midtownant]

The online market still keeps growing with new sites that are taking business away from the big internet sites. Sellers on some of the sites that charge high fees for selling your items are having a lot of new small companies competing with them. You can now sell an antique or collectible on seeauctions.com for
a very small fee in compare to other sites. sellers will be able to make 10% more on the items they sell. As these small sites grow the customer base they will also get higher bids for the sellers. It will be much easier to find that rare item on these sites. On seeauctions.com you do not have to wade though new and unrelated items to find what you collect. there are other sites that just sell crafts and jewelry and so many more. I think the big sites will not be able to compete because they will have to lower fees and there profits will drop.