Online retailers are reporting increased profitability and market-share growth despite the current economic downturn, with the biggest brands performing better than smaller rivals, according to the third report in Shop.org’s “State of Online Retailing 2009” series.
“The optimism and profitability in online retailing are more evidence of online being a bright spot in the economy,” said Scott Silverman, executive director of Shop.org.
In “The State Of Retailing Online 2009: Profitability, Economy and Multichannel,” conducted with Forrester Research, 57% of Web retailers said they were more profitable in 2008 than in 2007, driven in large part by cost cuts. Despite cutting expenses in areas such as marketing, fulfillment and customer service, 42% of online retailers also said their conversion rates also increased this year. More than one-third (34%) of respondents also said they had gained market share from brick-and-mortar specialty stores this year.
“Brands are winning online,” said Silverman, adding that because consumers want familiarity with brands, “the retailers that are most familiar to customers are getting a bigger share of the business.”
When it comes to messaging, 44% of retailers said that increasing value messaging is a high priority this year.
Despite this, Silverman doesn’t expect retailers to forego promotions completely.
He also expects social media to play a bigger role in retailers’ marketing efforts this holiday season, despite the fact that 66% said ROI for social marketing is unclear in the report.