Online auction sites suffer downturn

Online retailers will continue to pick up new customers but the rate will slow in the coming quarters

Auction sites including eBay are suffering a downturn in popularity, according to research by Point Topic.

The analyst firm revealed that the number of UK surfers buying goods at auction sites has dropped by four per cent in the past six months.

Furthermore, the percentage of people shopping online, while relatively high at 69 per cent in January 2008, has remained fairly static over the past 18 months.

"It is easy to get carried along by the enthusiasm for a dynamic sales channel like the internet, but it is important to take note of the limits of what is achievable," said Pamela Varley, research analyst at Point Topic.

"It appears that a ceiling has been reached under the current conditions, and retailers will need to ensure that their business models reflect this reality. Historically, this has not always been the case."

The research also suggests that the amounts individuals spend online has peaked, and that increasing numbers claim to spend nothing at all online from month to month.

The absolute number of online shoppers in the UK is still growing, but the report puts this down to increasing broadband penetration rather than other motivating factors.

It seems that, at best, retailers are holding online market share, but many sectors are seeing a drop in the proportion of consumers willing to spend money on the internet.

"Consumers, particularly women, need to see and touch some items before they buy (cosmetics, food and clothes top the list) and a growing proportion use the internet to check prices and availability before visiting a physical store," said Varley.

"The internet is increasingly regarded as a part of the buying process, rather than the start and end of it."

The report's overall outlook is not particularly inspiring as it concludes that online retailers will continue to pick up new customers but the rate will slow in the coming quarters.