Despite a struggling economy throughout most of this year, 72 percent of e-tailers believe the online channel is better suited to withstand an economic slowdown than offline channels.

According to The State of Retailing Online 2008, the 11th annual Shop.org study conducted by Forrester Research Inc., about one-third (35 percent) of online retailers surveyed said they expect their e-commerce business to perform better than expected in the next 12 months, while another third (33 percent) anticipate their online business will perform the same as expected.

This optimistic outlook is driven primarily by past results. According to the report, 81 percent of online retailers surveyed reported that their e-commerce business was profitable in 2007, and 75 percent were also more profitable last year than in 2006. Almost half (49 percent) of online retailers said their average conversion rate in 2007 was higher than in 2006, and that 36 percent of total sales were driven by repeat customers—higher than in 2006.

“Internet retailers have good reason for optimism as budget-focused shoppers head to the Web for value and convenience,” Shop.org Executive Director Scott Silverman said in a media release. “Online retailers are well-positioned to make the best of a potentially lean holiday season.”

Due to their outlook on the U.S. economy, however, 37 percent of online retailers surveyed said they've lowered their expectations for their e-commerce performance in the next 12 months.

The report advises that online retailers must still execute well to capture possible sales. In addition, it cautions that those sales might not necessarily be the highest-margin revenue due to increased input costs and the pressure to offer promotions such as free shipping.

The report is currently available to Shop.org members and can also be purchased directly at Shop.org/Soro08.

Source: National Jeweler