Online sales growth in October slowest on record

Online spending for October grew at the slowest pace since at least 2001, an Internet research company said Tuesday - the latest evidence that Web shopping is being dragged down by the deteriorating economy.

According to the comScore Inc. report, online spending increased a meager 1 percent last month from the year-ago period, marking the slowest sales pace for any month since the Chicago-based company began tracking the data seven years ago.

The results exclude business from auctions, autos and travel.

"While rising prices remained consumers' biggest concern in October, it's clear that the increase in the country's unemployment rate along with the shock of the financial market meltdown have had a negative impact on the psyche of the American consumer, and the effects were clearly felt in the online retail sector," comScore Chairman Gian Fulgoni said in a statement.

ComScore is expected to issue its holiday forecast Nov. 25. Last year, online sales for the November-December period rose 19 percent, but Web sales have steadily declined since January, with business falling off dramatically starting in July, according to Andrew Lipsman, senior analyst at comScore.

The comScore results confirm other reports from online retailers such as Amazon.com and Bluenile.com that Internet retailers are also feeling the pain of the financial meltdown, which intensified in September. Online jeweler Blue Nile Inc. said earlier this month that third-quarter profits fell more than 23 percent as consumers shelved big-ticket purchases. At that time, Blue Nile withdrew full-year earnings projections and didn't issue a fourth-quarter forecast because of the economic uncertainty.

Amazon.com Inc. said last month that its profit climbed 48 percent in the third quarter, but reduced its full-year sales outlook.

Saks Inc. which operates Saks Fifth Avenue, noted that Saks Direct - which includes its online business - saw its growth slow to 10 percent for the third quarter, compared to nearly 40 percent growth a year earlier. The overall company recorded a wider-than-expected loss.

Fulgoni said the general weakness in online spending was precipitated by curtailed spending across mid- to lower-income segments with households earning less than $50,000.

Overall, online retail spending from August through October grew 4 percent compared to the year-ago period, with spending declining 3 percent among households making less than $50,000. Among households with income between $50,000 and $100,000, spending rose 1 percent, while those making at least $100,000 increased their spending by a robust 14 percent.