Is it boom-time for the online retailers? - Net.Matters - January 2009

Data from Nielsen Online, which monitors web traffic and online audiences revealed this month the 10 most popular online retailers for October to December 2008.  Only 2 of the retailers listed were solely internet based - the remaining sites are all major high street retailers. 

Amazon was the most popular online retailer - it averaged 15.6 million Unique Visitors a month for the last quarter of 2008.  High street retailers Littlewoods and Asda showed the highest year on year growth with 66% and 53% respectively.

Rank	Retailer	Q4 2008 Average Monthly UK Unique Audience (millions)	Q4 2007 Average Monthly UK Unique Audience (millions)	YoY Growth
1	Amazon	15.6	13.2	18%
2	Argos	8.2	6.3	32%
3	Tesco	7.3	6.3	15%
4	Play.com	5.7	4.2	35%
5	Marks & Spencer	4.5	3.1	46%
6	Littlewoods	3.6	2.2	66%
7	Currys	3.4	2.5	35%
8	ASDA	3.4	2.2	53%
9	John Lewis	3.2	2.5	31%
10	Next	3.0	2.2	38%

Source:  Nielsen Online UK

The data led Alex Burmaster, Communications Director, Nielsen Online to comment:

“It's not that online retail will be impervious to the tighter financial environment but it has an opportunity to weather the storm better than other elements of the economy, particularly if retailers promote the web as the best way of finding cheaper goods in the most efficient and convenient way possible.”

When comparing the high street stores with online retailers over the Christmas period, it would appear that shoppers are ditching the high street sales in favour of the web to find more competitive deals.  And, to corroborate this theory, retailers like Marks and Spencer who recently announced they were cutting staff and closing stores because of the downturn, saw a 46% growth in online sales compared to the same period in 2007.

Looking across the 5 main retail sectors, Mass Merchandisers such as Amazon, Argos and Tesco were ranked the highest in terms of the average number of Unique Vistors per month for Q4 2008.  The sector which showed the highest growth year on year was Multi-Category Home and Fashion (Boots, M&S, BHS and Next included) with a 30% increase in Unique Visitors compared with 2007 figures.

Rank	Sector	Q4 2008 Average Monthly UK Unique Audience (millions)	Q4 2007 Average Monthly UK Unique Audience (millions)	YoY Growth
	All  UK Internet	15.6	13.2	18%
1	Mass Merchandisers	8.2	6.3	32%
2	Apparel/Beauty	7.3	6.3	15%
3	Home & Garden	5.7	4.2	35%
4	M/C Computers & Consumer Electronics	4.5	3.1	46%
5	M/C Home & Fashion	3.6	2.2	66%

Source:  Nielsen Online UK

Nielsen Online's Communications Director goes on to say that these results are “encouraging for the retail sector in 2009”, demonstrating that consumers are not focusing on the internet for one specific type of purchase:

“People aren't coming online just for small-ticket, everyday items like CD's and groceries but are increasingly looking to buy all manner of items from clothes for all the family to furniture across the whole house.”

New Media Age has also reported on research from IMRG which issued figures on Christmas Day online spend.  Comparing data with 2007, online spend was up by 21% - 3.8m customers spent £102m, although the number of customers online was down by 14%.  Added to this, data from eDigitalResearch found that the volume of web traffic increased by almost 100% between 25 and 26 December - many customers were trying to bag themselves a bargain with the likes of John Lewis, Next and Marks and Spencer starting their online sales on Christmas Day and saving petrol costs into the equation.

James Roper, founder and chief executive of IMRG emphasised the importance of having an internet presence since shoppers are more likely to bargain-hunt in a recession:

“It's becoming apparent that the recession is accelerating the rate at which the internet is impacting the retail sector. 

“Brands that are nimble in a cross-channel environment give their customers a more efficient, easy-to-use service and are rewarded with increased conversion rates and larger average shopping baskets.”

Rory Cellan-Jones, the BBC's technology correspondent in his article “E-tailing - has the revolution arrived?” refers to a positive boom in the online retailing market to the detriment of the traditional high street.  
 
“Back in the late 90s the dotcom evangelists told us that online start-ups would crush the dinosaurs of retailing and leave the shopping malls and high streets deserted.  That didn't happen - but a decade later the online retail revolution is finally happening.  And funnily enough, the dinosaurs are now leading the charge.”

Nielsen Online reported that the high street dinosaurs such as Littlewoods, Marks & Spencer, Argos, and Next all reported year on year online sales growth in excess of 38%.