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April 08, 2008

Shop.org/Forrester out with new ecommerce data...

We spend a lot of time at ChannelAdvisor following the various datapoints and thoughts around e-commerce and today Forrester research (Sucharita Mulpuru is the analyst) came out with a joint report/survey with the great folks at Shop.org (I/we are an active member FYI).

The headlines of the report are good news for internet retailers:

  • Forrester sees e-commerce growing at 17% y/y in the US (This is good because comscore is starting to talk about 14% and maybe lower).  I'm an optimist and think that in early 09 the pundits will update the data to be more like 20%
  • This puts e-commerce at $208B for 2008, up from $174 in 07
  • e-commerce represents 7% of retail.
  • search engine marketing (what I call paid-search) drove 35% of sales and is still the top channel for retailers
  • 65% of retailers are experimenting with social networks
  • Forrester is predicting that growth will be driven by the computer, CE, auto and apparel categories.
  • Retailers spend $.50/click on average for paid-search and see $8.47 in incremental revenue (that's a weird metric)

I downloaded the report and what's neat is that shop.org/Forrester are finally seeing and reporting on the multi e-commerce channel trends we've been talking about for years.  For example, they have this figure from the survey section that covers the top channels for retailers (note these would be larger retailers, primarily with brick-and-mortar operations as well I would assume):

Shop_org2

Another interesting datapoint they have from the survey is they asked retailers for a variety of e-commerce channels what the cost per order for the channel is and the average selling price.  I've found that most retailers like to look at channel costs either as a ROAS (return on ad spend) or an 'Effective Take Rate' (ETR), which is more of a cost of sales kind of model which helps for margin-planning/forecasting.  So I took the Forrester data and splatted it into a spreadsheet to calculate the ETR.  I also added eBay and Amazon as marketplaces with their ETR's and ordered the channels from lowest ETR to highest and this is the result: (Amazon/eBay are highlighted to indicate I added them)

Shop_org

Since this blog is targeted to primarily smaller retailers that are on-eBay/Amazon and going multi-channel, this is an interesting set of data.  The good news is if you are on eBay/Amazon you are already in two of the most efficient channels out there.  If you add affiliate (I haven't seen many SMBs successful with this), SEO and email you have most of the lower-cost channels around.

The only datapoint on here that looks unusual to me is the CSE data, usually we would see this more in-line with paid-search so I'm going to go look at our data and see if there's anything noteworthy there.  Not to toot our own horn here, but my guess is the retailers surveyed aren't watching their CSE programs very closely or using ShoppingAdvisor to optimize their CSE channel.

If you'd like to learn more, there are several news items out today covering the report:

Seeking Alpha disclaimer: I am long Google.

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