"The marginally negative growth in Q2, on the heels of flat growth in Q1, signals that online retail spending has yet to turn the corner after a disappointing end to last year," says comScore chairman Gian Fulgoni. "Unfortunately, it appears that the reality of nearly 10-percent unemployment and rising gas prices, coupled with an increased savings rate, continues to hold down consumers’ discretionary spending and it may still take some time to dig our way out of this recession."

Here are a couple of charts from comScore worth checking out:

As you can see, the fastest growing category for the quarter was Toys & Hobbies, which grew by 21% from the previous year. This was followed by Books & Magazines, and Video Games, Consoles & Accessories.

It’s not entirely surprising that online sales are down from a year ago, considering the changes in the economy that have taken place in that time. Necessities (like groceries) are still mostly bought offline. Typically, I think people tend to shop for things that aren’t truly "needs" when they do their online shopping, and so it makes sense that these sales would fall in tough times.

If anything, it simply highlights the importance of good marketing strategy for eCommerce businesses. Not only are you dealing with a damaged economy, but there is a lot of competition online.

Domino’s said that Internet orders made a "significant contribution" to sales growth with online sales in the UK and Ireland up 102 percent for the six weeks to December 30, compared to growth of 43.1 percent the previous year. Total online sales for the year were 60.5 percent higher than in 2006, hitting $63 million, compared to $39 million.

Chris Moore, Domino’s new chief executive said, ""Last year was a tremendous year for Domino’s Pizza in the UK and Ireland. Our strong sales performance was fuelled by the strong marketing of truly innovative new products, continual improvement in customer service times which we know directly impact on propensity to re-order and the superior quality of our product".

Domino’s reached its target of opening 50 new stores during the year, an increase from 46 a year ago and now has 501 stores. The company hopes to run 1,000 stores across the UK and Ireland.

"I’m excited by the prospect of leading this business forward towards our goal of 1,000 stores and to maintaining the momentum of the business into 2008 and
beyond," said Moore.
 

An article in The New York Times represents the more pessimistic view, and data from companies like Forrester Research and Jupiter Research is brought to bear.  “Forrester says that sales growth is pulling back in 18 of the 24 categories it measures,” one sentence states.

Dell, Best Buy, Apple, Amazon, and even Starbucks are then named as companies that have had to work around the slowdown.

Yet Techdirt’s Mike Masnick sees the issue in a different light.  “That’s to be expected of any market once it goes mainstream, because you simply cannot maintain the same growth rate on such a large base,” he notes.  “You hit diminishing returns. . . .  [I]f the best they can do is to say that growth rates are hitting their expected diminishing returns, it hardly seems like a real problem.”

So should the owners of online businesses, big or small, be concerned?  Probably not.  The market may be getting more competitive, but it’s not yet crashing in on itself.  This slowing growth could even be interpreted a positive thing – the last bubble that formed did a lot of damage when it burst.