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Internet gains more ground in holiday shopping

Posted by inet - 2005-11-25

More American consumers are leaving their cars at home and shopping online for the holidays in the face of high fuel costs, giving an extra boost to Internet shopping, analysts say.
A report by comScore Networks projects online spending for the holidays growing by 24 percent from last year to a total of 19 billion dollars.

A separate forecast by Forrester Research projects online sales of 18 billion dollars, a 25 percent increase over that firm's estimate.

According to Shop.org, the online arm of the National Retail Federation, Web retailers are gearing up for "Cyber Monday," the Monday after Thanksgiving, "which is quickly becoming one of the biggest online shopping days of the year." This year, Cyber Monday falls on November 28.

The group said the surge comes in part from people who use high-speed Internet connections in their offices. Also, many people have trouble completing their gift purchases over the long Thanksgiving weekend.

A recent Shop.org survey found 37 percent of consumers, or an estimated 51.7 million people, said they will use Internet access at work to browse or buy gifts online this year.

"On Cyber Monday, consumers set their sights on surfing for holiday gifts and shopping online," said Scott Silverman, Executive Director of Shop.org.

"This year, online retailers will be capitalizing on the increased traffic by offering special promotions and discounts."

According to comScore, consumers spent more than 380 million dollars on Cyber Monday or what it called "Black Monday," up 29 percent over the 2003 period.

A separate survey by America Online found overall holiday spending will likely be down seven percent from a year ago, but that more people will be shopping online to save on driving.

The survey of 6,239 consumers who research or make purchases online found that 52 percent plan to do even more buying on the Web this year. They plan to spend nearly half of their budgets (254 dollars) on Internet purchases, with books, apparel and music or videos as the most popular gift categories.

Of those in the survey who said they are planning to do more shopping online this season, 49 percent said it was because "high gas (petrol) prices make it too expensive to drive around to different retail locations."

"Even though gas prices have been declining since their peak in early September, consumers are still feeling the emotional and financial pinch, and they clearly see shopping online as a great way to conserve cash they spend on loved ones this holiday season," said Bob Hayes, vice president and general manager of e-commerce at America Online.

One cloud hanging over online shopping is the question of fraud and online safety. Recent surveys have shown growing consumer concerns about security on the Web and the loss of personal data that could result in identity theft.

A survey by CyberSource found online fraud will cost 2.8 billion dollars for US firms this year, up eight percent from a year ago.

Although the overall rate of fraud loss remains relatively constant at 1.6 percent of revenue, "mid-to-large merchants are taking a pounding," the research firm said.

A survey of more than 1,200 online and catalog shoppers by I4 Commerce found 72 percent were concerned about providing retailers with their credit card information in light of recent news about identity theft.

But the survey indicated 58 percent would do at least part of their shopping online this year.

"Consumers are increasingly concerned about the safety of presenting their financial information online and would like payment choices. It is up to the retailers to address these concerns and look at new alternatives for making shopping safer, faster and easier," said Vince Talbert at I4 Commerce.

According to Shopping.com, the hottest items for cyber-shoppers include anything related to Harry Potter, up 81 percent in the past week. Consumers were also looking at portable DVD players, Xbox 360 game consoles and and iPod Nano music players, the shopping site said.

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