Online Jewelry Sales Down 12% in 2008

Online jewelry and watch sales fell 12 percent year-over-year—making it one of the poorer performing categories in a down year for online spending, according to digital tracking firm comScore.

The fastest-growing retail category in 2008 was Video Games, Consoles & Accessories (up 29 percent vs. 2007), which continued to benefit from online sales of popular game consoles like the Nintendo Wii, Microsoft Xbox 360, and Sony PlayStation 3, the Reston, Va.-based firm wrote in its report, “The comScore 2008 Digital Year in Review.”

Other fast-growing categories included Home, Garden & Furniture (up 25 percent) and Sport & Fitness (up 25 percent), both of which benefitted from an increasing consumer willingness to complete high-ticket purchases, such as in the furniture and home exercise equipment categories, online.

The poorest performing retail categories for the year were Computer Software (down 18 percent) and Music, Movies and Video (down 23 percent), according to the report.

Total U.S. e-commerce spending reached $214.4 billion in 2008, a 7-percent increase versus the previous year. Travel e-commerce spending grew 9 percent to $84.3 billion, while retail (non-travel) e-commerce spending grew 6 percent to $130.1 billion.

Following several years of growth rates of 20 percent and higher, 2008 ranked as the softest year for retail ecommerce spending growth since comScore began tracking it in 2001. January showed the first signs of softness, as growth rates declined to 12 percent after growing at a 20-percent rate in 2007. Growth rates reached a peak in April at 15 percent, followed by eight successive month of declining growth rates in the remainder of the year. The important holiday shopping months of November and December saw negative growth rates, representing the first months on record to have lower online sales than the same month the prior year.

However, nearly 137 billion searches were conducted at the five U.S. core search engines in 2008, representing an increase of 21 percent versus the previous year, according to comScore. Search query growth was driven largely by an increase in searches per searcher, which rose 16 percent from the previous year, while number of unique searchers grew 6 percent. Google Sites, which generated nearly 85 billion searches in 2008, accounted for nearly 90 percent of the total growth in search query volume during the year.

Looking ahead, comScore said that 2009 will present challenges and opportunities for digital marketing and sales.

Key trends, according to the report, include the following:

• Viewing of TV and movie content online continues to become a more mainstream behavior, offering advertisers a new opportunity to capitalize on this highly engaged – and often difficult to reach – audience.

• The recession is causing major advertisers to re-evaluate their advertising expenditures, with several industries already indicating shifts in spending to the online channel to take advantage of bargain CPMs, ad-targeting capabilities, and more measurable advertising ROI.

• Distributed content (i.e. widgets and applications) continues to become more prevalent and offers publishers ways to reach incremental audiences online.

• As smartphones (including the iPhone) continue to drop in price, and new entrants dazzle consumers, 2009 is expected to be another record-breaking year for the mobile Internet. Mobile Internet penetration and engagement will continue to soar, making the mobile channel a more viable opportunity for advertisers and marketers.

• Though the consumer retail economy is clearly suffering during the downturn, online retail spending growth was still positive in 2008 and the channel continues to attract new buyers. The online channel is generally more cost-effective than offline for retailers and those looking to weather the economic storm will find ways to draw more shoppers to their online storefronts through discounts, promotions, and incentives.