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e-Commerce Growth Screeches to a Halt

Posted Nov 19, 2008 12:26pm EST by Henry Blodget

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.

______________________________________________________________________
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%

______________________________________________________________________

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.

______________________________________________________________________
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%

47 Comments

Joseph
Joseph - Wednesday November 19, 2008 02:35PM EST

This whole mess is what happens when many successive president administrations AND congress base economic/tax policy almost exclusively on spending and consider savings and responsibel spending with the utmost contempt and disdain. I am refering to consumer policy here, not government and/or business policy.

Yevgeny
Yevgeny - Wednesday November 19, 2008 03:09PM EST

Unions=communism get rid of unions and Detroit will be saved, just like Japan did and now they much better

Mark A
Mark A - Wednesday November 19, 2008 03:18PM EST

Why does so many people think that double digit growth is sustainable? This sort of growth just can't continue. And we are seeing now that it won't. Exponential growth is unrealistic and we should expect it to continue.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 19, 2008 03:25PM EST

We are all ignorant. We are just ignorant about different things.....

James
James - Wednesday November 19, 2008 03:25PM EST

Hey Blodgett - what's AMZN worth now?????????//////

PaulB
PaulB - Wednesday November 19, 2008 03:26PM EST

Weight the numbers properly and you get a rounded 5% increase, not 4%. That's 25% over Comscore's numbers. Figures lie and liers figure!

Shemaj
Shemaj - Wednesday November 19, 2008 03:27PM EST

How will Nigerian scammers make a living? LOL!

Dictator J.
Dictator J. - Wednesday November 19, 2008 03:40PM EST

This is what happens when you open up free trade. 3rd world countries steal the jobs and the US unemployment rate soars. Bring the jobs back to the US. Unemployment will drop. Plenty of new tax money for Uncle Sam. People will then be able to buy things with their newly found paychecks. Get rid of unions as they inflate salaries vs non unions thus forcing companies to look at other options. IE China, Mexico and India.

Jeffrey
Jeffrey - Wednesday November 19, 2008 03:43PM EST

I'm taking advantage I guess then, Amazon and Ebay falls and Fullstock.net hits the radar. Thats my E-commerce store, I have zero operating costs though so if nobody buys anything I'm not out anything but my time doing site maintenance. Active military so I have a guaranteed paycheck.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 19, 2008 03:47PM EST

Until the policymakers understand that the economy is supported not from some golden sky hook from above but from brick and mortar from below, the way out of this mess will be slow and painful. When will they ever learn...when will they ever learn???

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 19, 2008 03:49PM EST

I can't wait to hear that you jerks have been fired. Go get a real job and try to add soome productivity to the system instead of constantly bringing bad news.

charles.torre
charles.torre - Wednesday November 19, 2008 03:50PM EST

Here's a question, who fills a house full of crap you don't need, throw it out and do it again or buy a bigger houose for more crap?

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday November 19, 2008 04:10PM EST

BO crash continues.........

R.S.
R.S. - Wednesday November 19, 2008 04:35PM EST

Bush has not only run 3 companies in the ground, he has also wrecked this country. To all you republicans I hope you feel the pain and to all union members who vote the same when will you learn!!! Merry Christmas.

Ralph B
Ralph B - Wednesday November 19, 2008 04:11PM EST

We need a Holiday Stimulus Check in order to keep the economy from an April 1, 2009 Depression, and that is no joke. We were descending into a depression, then we start nosediving into a depression; if something don't pick up, we're be dropping into a depression out of controlled. Now that would be bad.

Mike
Mike - Wednesday November 19, 2008 04:36PM EST

History will call this time THE GREAT RECESSION.... welcome to it.

jeep guy
jeep guy - Thursday November 20, 2008 12:06AM EST

no shizzle give money to the consumer to pay their mortgages and bills now and new spending will insue, let the top 3 auto makers fail an reorganize or tell their ceo's to take pay cuts! They flew to Washington to beg 4 money in some crazy jet that costs millions... These people r crooks. We are in the great American heist!

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 19, 2008 04:13PM EST

Guys, go to &^%$ , I know how you love the fact that boomers looking to retire are loosing it all,

Willis
Willis - Wednesday November 19, 2008 04:48PM EST

My store on Amazon has taken a 20% hit, certainly not like last November. The averge item I sell is in the $15-$20 range, and my clients tend to be Males and Females aged 18-35. You can't get what I sell at the malls. Most of my best sellers are made by American companies. Hope it stays that way!

mom_of_two_js
mom_of_two_js - Thursday November 20, 2008 01:14AM EST

I'm likely using eBay this Xmas more than ever, making my first present purchase today. I'm looking for the very best deals this year and I'm hoping eBay can help!

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