Predictions for Q2 E-Commerce

As the fourth quarter unfolds each year and the holidays approach, e-commerce is measured and evaluated so closely that it seems as if each purchase is reported as soon as it is made. But judging e-commerce's progress during the rest of the year is more challenging.

While quarterly reports from big-name e-tailers provide an e-commerce snapshot, they do so a month or more after the books have closed on any given quarter. Also, these quarterly reports say more about an individual company's performance than about the sector itself. And lately, tech companies have been guarded at best when issuing outlooks.

But those who watch e-commerce as well as those who are in the trenches of online retail say the second quarter is shaping up to be fair to good, with online shopping more closely tied than ever to the overall economic outlook. No one is predicting a blockbuster quarter, and almost everyone is forecast-shy in general, but the mood seems to be increasingly optimistic.

Looking Upside

"People are still shopping online. It just happens more quietly this time of year," Michael Ahern, CEO of GiftCertificates.com, told the E-Commerce Times.

Ahern said the second quarter contains some important holidays for his company, including Mother's Day and Father's Day. "We're seeing stronger sales than this time last year on both our corporate and consumer sides," he said.

Consumers do seem ready to shop online again, assuming no economic monkey wrenches are tossed into the equation.

Checking It Twice

The Yahoo/AC Nielsen Internet Confidence Index survey conducted in March, which noted a slight downturn in online shopping confidence, found that more people plan to buy online between April and June. The index estimated that US$13.8 billion will be spent, less than predicted for the first quarter.

From a big-picture perspective, what may be important is the fact that successful companies are now distinguishing themselves, even at low-key times of year and in a harsh economic environment, IBM (NYSE: IBM) director of WebSphere commerce Bart Lautenbach told the E-Commerce Times.

"Right now, the growth seems to be about differentiation," Lautenbach said.

Companies like Lillian Vernon, L.L. Bean, Staples (Nasdaq: SPLS) and REI are proving that good business models and good customer service can pay dividends on the Web, he added. This is important because just as all dot-com business models once were seen as "can't miss" propositions, many observers considered all of them to be similarly bad after the bubble burst.

"We're seeing people make investments in moving online now because they see what works," Lautenbach said. "There are solid examples now, and that's helping e-commerce grow from the business side as well."

Surfing the Wave

Meanwhile, e-commerce is still riding a wave of momentum created by a fourth quarter that seems to gain in impressiveness over time.

Alan Montgomery, an associate professor of marketing at Carnegie Mellon University, told the E-Commerce Times that the 50 million shoppers who bought items online during the December holiday season represent a chance for year-round growth for the sector.

"The fact is that e-commerce, now that it is maturing, has to be compared with traditional retail, which has always been about cyclical and seasonal behavior," Montgomery said. "The good news is that a lot more people are considering the Web just another part of the retail landscape and that there is still a lot of upside growth potential at the same time."

Looking Ahead

Andrew Donchak, chief marketing officer of Autobytel (Nasdaq: ABTL), said consumers are heavily focused on the future. That can be both good and bad for e-commerce, depending on their outlook. But Donchak generally takes a positive view.

"People are in a forward-looking mode as far as interest rates and the recovery and the various factors that will shape the overall economy for the rest of the year," Donchak told the E-Commerce Times. "As the economy strengthens, e-commerce will only experience further growth."