12/30/2003
Online Retailers Rack Up Record Holiday Sales
Reach $11.7B, up nearly 30% over last year
TechWeb News
Online retailers have record sales to celebrate this season. E-commerce sales jumped 29 percent from $9.08 billion to $11.72 billion from last year to this year, a market research firm said on Dec. 29.
ComScore, which follows 1.5 million Internet users' spending activities, said online retail spending reached $950 million compared to $670 million a year ago -- an increase of 43 percent. And those Nov. 1 to Dec. 26 figures do not include online travel or auction statistics, comScore said.
Among other factors, online shoppers increasingly turned to the Internet to avoid crowds and bad weather, said Graham Mudd, comScore Networks analyst.
"Snow storms definitely influenced online sales," he said. "Online sales were up significantly over the average on the weekend of the big snowstorm."
Mudd said catalog companies tended to do well in Web selling initially because they understand how to sell in an environment in which consumers can't directly see or touch the products they want to purchase. But as Internet sales catch on, they are drawing sales away from virtually all retail outlets including catalogs.
"Categories such as gift certificates and flowers were standouts, thanks to the ability to send such gifts purely online or with same-day delivery," said Dan Hess, comScore senior vice president.
New categories also began to emerge, as Web users become more at home with online shopping. The new categories include furniture, home and garden, and jewelry and watches. Media products also have been moving well among online shoppers -- DVDs, CDs, and computer software.
In its annual online shopping report on "eSpending" Goldman, Sachs & Co., Harris Interactive, and Nielsen/NetRatings was even more optimistic, maintaining that online shoppers this year spent $13 billion, which represented a 46 percent increase over the year-earlier period. The eSpending report does not include online auction data.
The eSpending report said that "product categories for apparel, video/DVD, consumer electronics, toys/video games and books continue to be popular so far this season." The report said that online purchasing of apparel and clothing was up 35 percent and book sales up 33 percent while consumer electronics were up 12 percent, hitting the $1.4 billion mark. Toys and games rose 27 percent during the six-week period. The toy category was particularly dynamic as Wal-Mart entered into a price war with toy retailers, which maintain both online and bricks and mortar stores.
Lori Iventosch-James, director of e-commerce research at Harris Interactive, said online sales are having an impact on bricks and mortar retailing. "The increased reliance on Internet retailers is having a noticeable impact on traditional retail outlets," she said. "With extended shipping deadlines from online retailers, we expect this trend to continue as people want to avoid the late shopping crowds."
eSpending's report partner Nielsen/NetRatings' senior analyst Abha Bhagat argues that online shoppers do not represent a disruptive technology, but rather "another mainstream channel through which retailers reach out to customers."
Leading online retailer Amazon.com is also riding the year-end sales boom. The firm said it logged a one day sales record over the holidays when it conducted the sale of 2.1 million items -- one sale every 24 seconds.

By W. David Gardner

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