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Tech Industry

Web holiday shopping triples

Web sites were clogged as shoppers rushed online this season, and Net retailers are smiling.

    Online holiday shopping this year approximately tripled over 1997, according to reports from Internet merchants and e-commerce analysts.

    The latest study, released Monday by Boston Consulting Group and online merchants' group shop.org, found year-over-year sales grew 230 percent among online retailers surveyed for the period November 23 to December 20.

    "This was at or above most people's expectations,'' David Peceut, e-commerce specialist for Boston Consulting, told Reuters. He estimates online shopping revenues will reach about $13 billion for 1998, expects year-over-year growth to continue at over 200 percent, and projects 1999 revenues of $30 billion to $40 billion.

    Another analyst was even more optimistic. Marketing Corporation of America, a unit of ad giant Interpublic Group, topped other estimates of holiday spending, putting consumer purchasing for Christmas above $5 billion, nearly four times larger than in 1997.

    On December 16, America Online, which has attracted more than 1 million first-time buyers since Thanksgiving, reported holiday traffic on its shopping channel has been three and a half times higher than last year, with shoppers spending 50 percent more than they did in 1997.

    That coincides with projections from Forrester Research, which has predicted a threefold increase in the fourth quarter for online retailers, from $1.3 billion to $1.4 billion last year to $3.5 billion this year. The figures include travel bookings.

    Disney's online retail sales climbed 365 percent over last holiday season, reports spokeswoman Rebecca Anderson. Clothier Eddie Bauer, now in its fourth holiday season online, more than tripled its Internet revenue this year, said Judy Neuman, group vice president.

    "It's not over yet, and we couldn't be more pleased," Neuman enthused. "We had planned for it quite aggressively, and we beat our plans by a long shot."

    At 1-800-Flowers Web business increased 300 percent over last year, said senior vice president Chris McCann, although orders on other online venues, like America Online showed lesser increases. Overall, online sales represent 10 percent of revenues, with the rest over the phone.

    At auction site First Auction, revenues were up 300 percent over last year, according to vice president of merchandising Marv Kramer. Better yet, gross profits climbed 350 percent.

    Indirect indicators showed similar increases. At Web directory Excite, traffic in shopping areas was up 400 percent over a year ago. Ditto for payment processor CyberCash.

    "We've seen more than a 400 percent rise in our payment transaction volume on the Internet from December 1997 to November 1998," Jim Condon, CyberCash chief operating officer, said in a statement. That reflect a significantly increased number of merchants whose transactions CyberCash is handling.

    As reported earlier, SkyMall, a cataloger on airplanes, saw its Internet sales for the fourth quarter tripled to $1 million, from $300,000 a year ago. Full-year Net sales rose sevenfold. SkyMall's shares almost tripled yesterday.

    Sharper Image, a retailer of unusual gadgets, said last week that sales through its Internet site rose sixfold for December 1-21.

    The exact dollar figure for the holiday season shopping was not disclosed due to agreements between Boston Consulting and the companies surveyed. But a source familiar with the survey said the figure, if non-gift items like airline tickets were included, would be in the range of $2 billion to $3 billion

    Difficulties experienced by some sites included crashing, clogged lines from high volumes of shoppers and some retailers needing to email customers to let them know their presents would not arrive before Christmas, due to stock shortages.

    But Peceut said customers he spoke to informally and the companies themselves said the experience overall was still more civilized than the shopping malls braved by real-world shoppers. The size of the average order was $55, up 6 percent over the average order placed last year, the study said.

    Online shoppers apparently procrastinate like everyone else, with heavier shopping volume coming closer to December 20.

    The results of the study were consistent with findings released in November by Boston Consulting and Shop.org. That study also saw over 200 percent revenue growth online.

    Boston Consulting, a privately held management consulting firm, said it collected data from leading online retailers in major gift categories for the period November 23 through December 20. It surveyed online retailers of apparel, books and music, home and garden, specialty foods, electronic goods and others.

    Meanwhile, ValueVision International a retailer with a home-shopping television network and Internet site, said holiday season TV sales surged 70 percent, spurring its shares to more than double.

    ValueVision said sales at its Web site before Christmas increased at a faster rate than the TV sales, though it didn't say how much. The stock rose 4.5 to 10.75 in early afternoon trading of 17 million, making it the most active on U.S. markets.

    Shares of retailers, especially catalog and TV marketers, are surging as they sell more goods on the Internet.

    "The market is perceiving that ValueVision will become more heavily focused on the Internet,'' said analyst Steve Monte at Security Capital Trading.

    ValueVision's shares earlier jumped as high as 20.5. Much of the stock's rise today is based on its potential gains on the Internet, analysts said.

    Reuters and Bloomberg contributed to this report.