Forrester: e-commerce 'better suited to withstand economic downturn'

Online retailers are shifting marketing efforts from traditional print advertising to cheaper tools such as Facebook, Twitter and e-mail to gain market share or retain customers in the economic downturn, according to an industry study being released Tuesday via the AP.

According to the survey, which was conducted by Forrester Research for the National Retail Federation's Shop.org, merchants believe "online business is better suited to withstand an economic downturn than physical stores or catalogs," despite challenges for both.

The 117 online retailers polled in the study reported scaling back hiring and increasingly expensive search marketing programs, which includes paying for appearances in top Web search results.

What's more, online merchants who are beating expectations will likely fuel much of the e-commerce investments in the coming months, according to the survey.

This news is nothing new for supporters of the Internet in all its forms -- the mentality of a low overhead, bang-for-your-buck strategy. Retailers were slow to embrace the Internet as anything beyond complementing their core sales in the real world; the economy has forced their hand, it seems.

Average total purchases have declined in the economic downturn, according to the article, but shoppers are increasingly turning to the Internet for deals (such as those posted every day by ZDNet's Gadget Gal).

Forrester forecast in January that total U.S. online sales, where growth has been slowing for some years, will increase 11 percent to $156.1 billion in 2009, compared with a 13 percent gain in 2008.

For 2010, Forrester projects 13 percent growth, and then 10 percent growth in 2011, 9 percent in 2012 and 8 percent in 2013. (These figures exclude online travel sales.)

About 30 percent of retailers expect to cut their spending on Web operations for the year, while 24 percent said they would increase it. Forty-six percent said they would spend as planned, according to the study.

Almost 90 percent of retailers listed e-mail marketing as a top priority, and almost three-fourths of the surveyed retailers plan to send targeted e-mails based on customers' expressed preferences or past purchases.

The study also found that companies that are growing faster than expected are more likely to embrace social media. Among retailers that expect to cut spending on their online business this year, only 24 percent plan to cut spending on social media, indicating a willingness to experiment in this emerging area, the study says.

The study says retailers want "quick wins," but I think investing in new strategy is more long-term than it seems.