Online Sales to Jump 17% in 2008

Published on May 20, 2008 | Comments: 0
Online sales will increase an impressive 17% in the coming year to hit $204 billion, despite the sluggish economy, outperforming overall retail sales by a large margin, according to the "The State of Retailing Online 2008: Marketing Report," produced by Forrester Research for Shop.org (a division of the NRF). Online merchants are in unique positions to capture the business of all consumers, from the affluent shopper to the bargain hunter, Scott Silverman, executive director of Shop.org, told TechTalk. Apparel ($26.6 billion), computers ($23.9 billion), and autos ($19.3 billion) are expected to be the top categories for online retailers in 2008. Marketing Tactics Online retailers allocate 53% of marketing budgets to online customer acquisition and 21% to customer retention, according to Forrester. Methods that attract new customers and previous ones, such as affiliate marketing or search-engine marketing (currently a driver of 35% of sales), will remain a favorite of online retailers. Still, 90% of respondents surveyed said they use pay-for-performance search placement, and 79% said they would make this tactic an even greater priority this year. Offline, catalogs and other direct-mail pieces will take priority over television and newspaper advertising. Retailers said they would also focus on social-computing initiatives, like social-network advertisements (65% of retailers showed interest) and widgets (55%), which are considered effective brand-building methods. However, email marketing and free-shipping promotions have proven statistically to be more effective sales conversion and revenue drivers, the report noted. Just 35% of online retailers said they plan to focus on shipping promotions this year, though 85% have used them in the past.

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