Q3 E-Tail Rebounded After A Slow Q2: Poll

• Doug Tsuruoka
• On 6:32 pm EDT, Monday October 5, 2009

In a good sign for the holiday season, a new poll found that e-tail sales rebounded last quarter after a weak second quarter.

The poll by Mercent, which sells services and software that help firms that sell products on big e-tail sites such as Amazon.com (NasdaqGS:AMZN - News), found that sales for a group of its clients rose 11.4% last quarter compared with 2008's third quarter.

That's way up from an increase of just 5.9% in the second quarter.

"This is a good leading indicator for a healthy online retail market during the upcoming holiday season," said Eric Best, Mercent's chief executive.

Seattle-based Mercent's 100 clients include Guess (NYSE:GES - News), REI and Brookstone.

Since the start of 2008, it's tracked the quarterly sales of a third of its customers.

If Best is right, e-tailers such as Amazon might see a nice sales bump in the fourth quarter.

Mercent's E-Commerce Index last quarter hit its highest point 19ince 2008's second quarter, when its clients' year-over-year e-commerce sales jumped by 60%.

The financial crisis hit the following quarter, and Mercent's index fell thereafter, hitting its low in the second quarter of 2009.

But today, many people believe the signs that the recession is easing, says Best.

He says more people again are buying discretionary items like clothing and household goods after being tight-fisted the previous 14 months.

Best, though, sees no sign of a rebound in sales of luxury goods.

Mercent's data is based on revenue generated by paid online ads for its clients.

Best says Mercent's clients outperform the overall market, so its findings might be higher than others.

On the other hand, he points out that the poll is based on solid data about what's happening at major e-commerce players such as Amazon.

Based on Mercent's data, Amazon is seeing a huge jump in third-party sales on its site. Amazon doesn't break out third-party sales, but Best says such sales might have surged as much as 90% last quarter.

Analysts expect Amazon will report later this month that overall third-quarter revenue rose 18% to $5 billion.

Other reports also show improvement in U.S. spending last quarter.

The U.S. Commerce Department has reported that retail sales in August rose by an adjusted 2.7% over July, beating economists' views of 1.9%. That was the largest monthly gain since January 2006.

The Commerce figures showed surprising strength in a depressed corner of the economy, as clothing shops, bookstores and department stores all had gains.

Best says e-tailers are much better positioned for this holiday than last. He says big players have better inventory control and are poised to enjoy higher profit margins than last holiday season.

Analysts, though, remain wary.

Back-to-school sales were soft, says Forrester Research analyst Sucharita Mulpuru.

The firm hasn't released its report on third-quarter results.

Mulpuru does agree that consumer confidence is on the mend and likely will continue to improve throughout the year.

"People feel the worst is over," she said. "That doesn't mean that consumers are going to go wild this holiday season, but we'll probably see a little less ultrafrugality than last holiday season."

Buzz up!