E-Commerce Is Riding-Out The Economic Storm, Says Forrester

Written by Fred J. Aun
April 22nd, 2009

Believe it or not, here’s some good news: According to Forrester Research, nearly 20 percent of retailers surveyed said they were cutting or delaying investment in E-Commerce technology due to the recession.

In almost any other economic climate, word of IT cutbacks that extensive would definitely be seen as bad. However, given that we’re suffering through the worst economic downswing in 40 years and venerable companies are dropping like flies, the figure should be seen as relatively good news, said Forrester Senior Analyst for E-Commerce Technology Brian Walker.

In December, Forrester conducted a survey of 60 E-Commerce and channel strategy managers. Walker asserts it would be wrong to put a negative spin on the fact that 19 percent of those interviewed said their companies were pulling back or postponing E-Commerce IT expenditure. “In the grand scheme of things, considering what’s happened to the economy, 19 percent of retailers talking about delaying or putting off investment is a relatively small number,” Walker said.

He said he didn’t have past year figures with which to compare the numbers, but his experience as an E-Commerce analyst, and answers to other questions on the survey, has him convinced many major retailers are embracing E-Commerce as a solid source of revenue during a period when every dollar is precious. Walker also said that, although the survey was done in December, he’s convinced its findings remain valid now that it’s April.

The retail world has certainly seen its fair share recently of merchants either backing off existing E-Commerce operations—such as Canadian Tire–or deciding to suspend any additional investment, sort of a forced stagnation, as with Borders. But Walker said that it would be an error to conclude from those examples that the overall retail space is giving up on E-Commerce.

“The Borders business overall is really suffering, so launching a new Web site might not be the answer to their troubles,” Walker said. “It doesn’t reflect the fact that E-Commerce as whole, across the board, is weak. You cannot overcome core challenges to your business by adding this channel (E-Commerce). E-Commerce will be in support of your overall value proposition and overall brand if done effectively.”

If Forrester’s conclusions are true, it would be a reassuring sign that E-Commerce execs at retail are getting more CFO, COO and CEO support than many had feared. Slashing E-Commerce IT spending as a quick way to shore up an ugly balance sheet would not only be a foolish idea but also a downright dangerous one. The economy will improve, sooner or later, and the last thing a retailer needs, when it does, is a glitch-ridden, underperforming and outdated E-Commerce platform.


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