E-Commerce Skips Recession?

What recession? That is what you will hear from some e-tailers if you ask them how they have fared in recent months.

According to the U.S. Department of Commerce (DOC), e-commerce sales gained 19.3 percent year over year in 2001, although total retail sales grew by just 3.3 percent.

Brick-and-mortar retailers are eagerly awaiting the spending surge that often follows economic downturns, fueled by pent-up demand.

But e-tailers -- many of which cruised through the recession unscathed -- are eyeing the imminent recovery as an opportunity to line their pockets even more. What gives?

Keeping Pace

Who would have guessed that some e-commerce firms, oft-heckled for their ephemeral life spans, would emerge as rock-solid, recession-defiant forces?

Clearly, many technology companies met their maker in 2001. But for those that pulled through, the recession often was nothing more than a minor speed bump.

Steady online spending started in the first quarter, totaling US$7.59 billion, followed by $7.45 billion in the second quarter, the DOC reported. Consumers spent $7.47 billion online in the third quarter and closed out the year with a whopping $10 billion spree.

Must-Haves

Think about your spending patterns over the past year and a half. Chances are you shunned big-ticket items like cars, furniture and major appliances, especially if you counted yourself among the unemployed masses.

But by and large, shoppers buy clunky, costly products in person, not online. Therefore, it is not surprising that total retail sales slumped last year.

Now, think about a few purchases your tightened budget allowed you to make. A half-dozen books, CDs, a handful of birthday presents and some home-office supplies, perhaps?

Consumers are much more likely to buy such low-ticket, commodity-type necessities online.

Hence, the 19.3 percent spike in online sales last year begins to make sense.

Bargain Hunters

What is more, consumers have been especially price-conscious lately, bargain hunting with relentless determination.

The Web is tailor-made for bargain hunting. With sites like Half.com, DealTime.com and Pricegrabber.com, people can ferret out discounts in a fraction of the time it might take to meander through a mall.

And if customers found themselves on the fence about an online purchase because of shipping costs or a cash shortage, many e-tailers went out of their way to remove such obstacles.

Flexible Plan

For instance, in November 2001, Amazon.com (Nasdaq: AMZN) tapped into consumers' long-standing penchant for procrastination by unveiling its credit account payment option.

Allowing customers to "buy now, pay later," Amazon played right into the recession-hampered consumer mindset.

And to further grease the buying skids, the e-tail giant introduced free shipping on orders of $99 or more.

Following suit, Buy.com and Barnes & Noble.com (Nasdaq: BNBN) also treated shoppers to similar shipping deals.

Good to Better

By aligning themselves with consumers predisposed to buy low-cost, Web-friendly merchandise, e-tailers weathered the economic slump like ducks in a downpour.

Ironically, the true impact of e-commerce is getting harder and harder to measure because more retailers are blending online and offline sales and marketing channels.

So, as we tip-toe into the first phases of economic recovery, e-tailers likely will maintain or increase sales while driving at least as many in-store purchases.

That's what they mean by "What recession?" Go figure.