Good news: Despited the sluggish economy, online retail sales are expected to rise 17% this year. Bad news for consumers: Online retailers are growing weary of free shipping, online coupons, and other carrots to drive sales.
In a survey conducted by Forrester Research for the National Retail Federation, only 35% of online retailers said they would focus more on incentives and promotions, like free shipping, to boost sales this year. That’s a significant change in strategy: 84% of that same group said that they used those promotions in the past year.
Why? They say the business has matured to the point they don’t need them. Shoppers who scour the Web for deals are being replaced by more affluent consumers, who are increasing their Web spending.
So where are retailers spending their promotional budgets? They told Forrester they want to spend more money advertising on social networks. But we wonder: how many people will click if the ads on MySpace if they don’t also say “free shipping?”
Even without incentives, Forrester says online spending will come in at $204 billion in 2008 from $174 billion last year.
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