e-Commerce Growth Screeches to a Halt

From Silicon Alley Insider:

U.S. retail e-Commerce grew 1% year-over-year in October. One percent — that's not a typo. A year ago, U.S. retail e-Commerce was growing 20% year over year. Six months ago it was growing 15% year over year.

To call this a "slowdown" would be an understatement. This is called smashing into a brick wall.

One reason for the crash? e-Commerce spending by consumers with incomes under $50,000 is now shrinking.

comScore:

Retail E-Commerce Growth Rates Show Six Consecutive Months of Slowdown

A review of monthly retail e-commerce growth rates depicts the slowdown in the U.S. retail economy.  Retail e-commerce growth rates have fallen from a height of 28 percent in August 2007 to a growth rate of just 1 percent in October 2008. October represents the sixth consecutive month this year of slowing growth rates.

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Retail E-Commerce (Non-Travel) Growth Rates

Excludes Auctions, Autos and Large Corporate Purchases

Total U.S. – Home/Work/University Locations

Source: comScore, Inc.

Month      Y/Y Percent Change

Jun-07            25%

Jul-07            22%

Aug-07            28%

Sep-07            19%

Oct-07            19%

Nov-07            20%

Dec-07            18%

Jan-08            12%

Feb-08            14%

Mar-08             9%

Apr-08            15%

May-08            12%

Jun-08            11%

Jul-08             8%

Aug-08             6%

Sep-08             5%

Oct-08             1%

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Negative Growth Rate among Lowest Income Earners

A three-month trailing average of retail e-commerce spending reveals that the low and middle-income segments are responsible for much of the softness. Overall, online retail spending from August through October grew just 4 percent versus year ago, with spending declining by 3 percent among households making less than $50,000. Households with income between $50,000 and $100,000 showed marginally positive spending growth (1 percent), while those making at least $100,000 increased their spending at a healthy rate of 14 percent.

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Retail E-Commerce (Non-Travel) Growth Rates by Income Segment

Excludes Auctions, Autos and Large Corporate Purchases

Aug-Oct 2008 vs. Year Ago

Total U.S. – Home/Work/University Locations

Source: comScore, Inc.

HH Incomes Segment    Aug-Oct Y/Y       Share of Total
          Percent Change   Retail E-Commerce Dollars Spent                                                              

$0 - $49,999           -3%                      21%

$50,000 - $99,999       1%                      45%

$100,000+              14%                      35%

Grand Total             4%                     100%