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Bargain-hungry shoppers to boost Web holiday sales

Posted by iNext - 2005-11-29

Online holiday shopping is poised for another record year, analysts say, though much of the double-digit percentage gain is expected to come from the same deep discounts and promotions driving traditional retail sales this season.
 
With 59 million Americans expected to shop online on Monday, analysts said high gas prices, coupled with the increased availability of high-speed Internet connections at home would lead more consumers to shift purchases to the Web.

"Cyber Monday" marks the unofficial kickoff of Internet retailers' holiday season and is typically among the biggest online shopping days of the year, generating $386 million in sales last year, according to tracking firm comScore Networks.

Many retailers introduced aggressive promotions and discounts, said Scott Silverman, executive director of National Retail Federation unit Shop.org, adding that the biggest day for online shopping typically falls in December.

Online spending this holiday season is expected to exceed $19 billion, a 24 percent rise over last year, comScore said. Over Thanksgiving weekend, online consumer spending rose 33 percent to $737 million.

Much of that growth was driven by online sales at traditional big box retailers like Wal-Mart Stores Inc., Best Buy Co. Inc. and Target Corp., due their array of promotions and their ability to make in-store returns, comScore said.

Those stores, as well as No. 1 online retailer Amazon.com Inc. and Web auction site eBay Inc., made the top five visited retail sites last Friday, the traditional start of the holiday shopping season, according to Nielsen//NetRatings.

PROMOTIONS CRITICAL

Wal-Mart's traditional stores emerged as the early winners over Thanksgiving weekend as aggressive discounts paid off with better-than-expected "Black Friday" sales.

Online, promotions like free shipping and discounts are just as critical, according to one analyst.

"It's something that consumers expect," said Heather Dougherty, a senior analyst at Nielsen//NetRatings. "You can easily compare prices and find the best prices online and make the holiday budget stretch a little bit further."

On its Web site, Wal-Mart was offering 97-cent shipping on many of this year's most popular toys, and Best Buy was advertising several online-only promotions, such as 10-percent off certain digital cameras and camcorders.

Dougherty also said she expected some consumers will forego trips to traditional retailers in favor of online shopping, in part, because gas prices are high.

Online-only retailers like Amazon.com Inc. and eBay Inc. are also expected to post strong sales this holiday season, in light of consumers' appetite for bargains, experts said.

Merrill Lynch analyst Justin Post said in a note to clients on Monday that Wal-Mart's better-than-expected sales "could indicate that consumers are bargain hunting this holiday season -- a positive for online retailers."

Amazon spokesman Craig Berman said the company expects to have its best holiday season ever this year.

Specialty retailers that sell products like clothing and jewelry are also expected to benefit from increased consumer willingness to shop online, according to one expert.

"Apparel sales have been stronger than they had been in the past as people get more comfortable buying things on line," said Kurt Peters, editor of trade magazine Internet Retailer. "Just about every category will benefit."



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