Online retail sales dip during February, but don’t panic just yet

Online sales aren’t entering a downward trend just yet, at least one expert has argued, despite figures from the most recent NAB Online Sales Index showing a dip in growth during February.

The figures, which showed a 19% drop from the same point in 2012 to $13.1 billion, are the weakest in a year. In January, NAB had said online sales grew 27% to $13 billion.

The index fell from 202 points to 193.

The development comes as more businesses than ever attempted to utilise the internet during Christmas and the New Year to boost sales.

But Sam Yip, senior research analyst at Telsyte, says the dip isn’t anything to be worried about, especially as the overwhelming trend shows consumers are moving to online stores. The NAB index, he points out, doesn’t include PayPal figures.

“There are plenty of stores which use PayPal, so that’s a big chunk of stores NAB isn’t covering,” he says.

“So I don’t think it’s right to make any assumption based on that one index which isn’t covering a large portion of the market.”

However, the figures are definitely showing a decline. Several large segments including department stores and fashion have declined, with Alan Oster, chief economist at NAB, confirming to Fairfax “every category…went backwards”.

Yip says it’s important to remember many stores don’t run promotions in February, except for Valentine’s Day, with many opting to wait.

“What we saw in our own research was a drop in the number of promotions being run in that period,” he says.

“These stores are gearing up for the April period, around Easter, so why would you run your promotions during February when you could potentially have a bigger hit during April?”

The dip in online sales comes as several businesses are still attempting to boost their digital strategies. Both Myer and David Jones are spending millions on upgrading their digital strategies, with both recording substantial games.

The most recent series of financial results has also seen a number of businesses disclose just how much money they are making from online sales. JB Hi-Fi recorded $37 million in digital revenue for the first half of the year, while Specialty Fashion recorded $11.3 million for the first half.