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Retail eCommerce growth falls sharply

Nov. 24, 2008

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Even before this global financial meltdown that started in late September, this year had already been shaping up to be one of the weakest holiday season yet for retail eCommerce, and this comes as no surprise to most analysts.

Based on just-released third quarter eCommerce sales numbers from the U.S. Department of Commerce, some are now predicting even weaker growth, both for the holiday and 2009 as a whole.

The U.S. DoC estimates that overall eCommerce sales rose by only 4.6 percent in the third quarter of this year, compared with the third quarter of last year.

Excluding travel, online sales will total about $137 billion this year, up 7.2 percent year-over-year, compared with 2007ís 19.8 percent overall growth rate.

Just six months ago, eMarketer projected that retail eCommerce sales growth would drop to about 14.3 percent in 2008 when compared with last year. Benchmarked against the new DoC data, eMarketer now predicts that this year will now be the first year of single-digit growth since the beginning of 2000.

Now eMarketer expects that consumers will spend just about $30.3 billion online in November and December 2008. May numbers were a mere 10.1 percent of growth over 2007ís holiday spending. But the new estimate is for just 4 percent overall growth.

This year's extremely weak economy is placing a hefty downward pressure on eCommerce sales, especially for this holiday season. Overall eCommerce shopping growth had already been slowing naturally as part of the channelís maturity. The economy is slowing now even more.

Jeffrey Grau, eMarketerís eCommerce analyst says "weíre nearing the bottom of this, or at least this is what we're hoping for... People are going to be a lot more careful with their money this holiday season."

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Source: eMarketer.

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