Last Tuesday, U.S. Commerce Department announced that online shoppers spent $47.5 billion, a 17.5% jump from last year $ 40.2 billion. This marks the ninth consecutive month that e-commerce has posted double-digit gains. Michael McNamara, vice president of research and analysis for MasterCard Advisors, believe the causes to this increase include high gas prices and the summer heat wave. He believes the heat and high gas prices are keeping people off of the roads.
It has been reported by MasterCard that E-commerce accounted for approximately 4.6% of total retail sales during the second quarter, the highest E-commerce has ever accounted for in the retail industry. MasterCard based this report on retail sales using all payments forms, including credit and debit cards of all brands, along with cash and checks. The retail sales growth estimate is based on July same-store sales totals reported of 28 retail companies, excluding Wal-Mart. Total adjusted retail sales excluding food service during the second quarter reached $1.04 trillion. The Commerce Department’s report on e-commerce sale for retail industry is even higher, for June showed retail spending was up 8.9% from a year ago, but declined 1.1% from May to June this year.
High retail sales usually result in higher inventory levels and expenses, but due to the recent swings in the stock market and economy, retailers are still carefully watching their spending. One example is Saks Inc.’s forecast that it would raise inventory level by a mid-single digit percentage, a very slight increase, during the second half of 2011 compared to last year.
Despite the economy downturn, top online retailers tend to have a competitive advantage at this time because they continue to spend on marketing and advertising, constantly improving their e-commerce website, and offer lower prices than small and mid-sized retailers. Through this, top 25 retailers have gained market share throughout 2009 and 2010. However, holiday promotions and back-to-school sales have helped ease the market share lost experienced by small and mid-sized retailers.
