Study: Auto Market Among Top Online Sales Categories

From Auto Remarketing
April 08, 2008

SCOTTSDALE, Ariz. – Despite widespread retail declines across the American economy, a recent study projects an upswing in online shopping for 2008. This includes the auto industry, which analysts predict to be among the top three Internet sales categories.

The State of Retailing Online, a Shop.org study conducted by Forrester Research, anticipates that online retail sales will increase by 17 percent this year to $204 billion. 

The auto industry is expected to account for $19.3 billion of those sales, which would make it the third-largest online segment behind apparel ($26.6 billion) and computers ($23.9 billion), the report highlighted. 

“From higher shipping costs to changes in consumer shopping habits, online retailers are not immune to the current economic climate,” said Scott Silverman, executive director of Shop.org.

“But the fact that online sales will increase substantially this year demonstrates the resilience of the channel and is a testament to the value and convenience most customers find when shopping online,” Silverman continued.

The study pointed out that as people become more comfortable with the Internet, online retailers must choose between two sales focuses: retaining current customers or attracting new ones.

According to officials, 53 percent of online retailers’ marketing budgets is devoted to finding new online customers, while 21 percent is for customer retention. 

But, many retailers have used search-engine or affiliate marketing as effective retention tools that not only market to existing customers, but bring in new shoppers, as well.

“What’s spearheading online retail sales growth is a tale of two shoppers that visit the Web for very different reasons,” explained Sucharita Mulpuru, Forrester Research principal analyst and lead author of the report. “The casual shopper goes online to look for the best price, leveraging the transparency of the Internet to save money.”

“However, more affluent customers appreciate the convenience of shopping online and are not necessarily looking for the best deal,” Mulpuru continued. “Retailers would be wise to recognize there are significant opportunities within both audiences and should market to them accordingly.”

In order to find new customers, retailers have used search-engine marketing more than anything else. According to the study, 35 percent of sales have originated from that source.

Moreover, 90 percent of respondents stated they use pay-per-performance search placement. Seventy-nine percent plan to make it a greater priority in the coming year, officials stated.

Still, such offline strategies as catalogs and direct-mail have helped retailers convert shoppers to the Internet. What’s more, the study indicated that retailers tend to use those tactics more than TV or newspaper advertising.

According to the study, 65 percent of respondents said they would focus more on social networking resources, while 55 percent indicated they would devote more focus to widgets.

These type of campaigns, however, are thought to be more useful in brand-building versus driving revenue or sales conversion, officials indicated. 

Instead, officials stated, the report recommended that e-mail marketing and free shipping promotions be used to boost sales.

http://www.autoremarketing.com/ar/news/story.html?id=7681#

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