Forrester: Online spending slumps in May

Forrester: Online spending slumps in May

Nipped by a decrease in travel shopping, consumer online spending dropped from $US4.3 billion in April to $3.9 billion in May, according to a survey released Monday by technology research company Forrester Research.

The number of households shopping online also decreased over the period, notching down to 14.8 million in May from 15.7 million in April, the Forrester Online Retail Index indicated.

"I can't say whether there is an (overall online spending) slump," said Forrester research director James McQuivey, "because the spending drop could be totally attributed to a seasonal drop in travel spending."

According to the Index, sales from airline tickets slipped from $776,259 in April to $698,381 in May, and sales from car rentals dropped from $246,969 to $173,945 over the same period.

It was difficult to tell whether consumers were booking their travel earlier or just staying put, said McQuivey.

May's lack of travel spending did account for the slip in overall consumer spending for the period, however, said McQuivey.

Consumers spent an average of $265 per person in May, versus $273 in April.

The spending dip should not be seen as an concrete sign of a faltering economy, however, warned McQuivey.

"I am constantly astonished in the month-to-month variation (of online spending)."

The analyst noted that online shopping activity jumps during holiday months like February, when people in many parts of the world are busily ordering flowers and candy for their sweethearts, and during the Christmas season. However, it's important to note that average consumer spending fluctuates even during these shopping frenzy periods, said McQuivey. Flowers and candy, for instance, are not as expensive as back-to-school months' clothing shopping sprees.

Looking ahead, McQuivey said that June is usually a disappointing retail month across the board, so if the figures continue to drop it will still be hard to tell whether the economy is in a rut or if it is just the effects of a summer slowdown.

"It's too early to say," said McQuivey.

The Forrester Online Retail Index measures the growth and seasonal effects of online shopping on a monthly basis, based on responses from 5,000 consumers. Forrester conducted its survey in conjunction with Internet marketing research company Greenfield Online.

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