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HolidayBuyer's Guide
Tech Industry

Holiday sales slowed for online retailers

E-tailers saw a sluggish holiday season, but that hasn't dimmed consumer enthusiasm. More shoppers are expressing praise about their online experiences.

Online retailers had a generally sluggish holiday season, booking only a 15 percent increase in sales over the previous year.

Online stores sold $13.8 billion in holiday retail and travel in November and December, compared with $12 billion sold last year, according to a study by Goldman Sachs, Harris Interactive and Nielsen/NetRatings. Holiday sales jumped 54 percent in 2000 over the year before, and up 125 percent in 1999.

In early November, Nielsen/NetRatings said it anticipated $10 billion in online holiday sales, but that excluded the travel sector and some other miscellaneous spending categories, which were dropped from the study after the Sept. 11 attack. Had those categories been included, the anticipated total would have been closer to $15 billion, according to Sean Kaldor, an analyst with NetRatings.

"Our expectations were bolstered by strong results from September, which saw 54 percent annual growth even with the terrorist attacks," Kaldor said. "But the economy continued to deteriorate, pulling spending down to record-low levels."

Spending in October rose 25 percent from the same month in 2000, and November barely budged 10 percent--the slowest growth rate for that month ever, Kaldor said.

Research firm Jupiter Media Metrix predicted $11.9 billion in sales for holiday retail and travel for the 2001 season, but has not yet released its final figures.

In the face of the economic recession and the Sept. 11 terrorist attacks, the numbers remain encouraging, analysts said.

"With the holiday-buying season behind us, we're left with one inescapable truth: The Internet has become an integral part of holiday shopping," said Charles Buchwalter, a vice president of media research at Jupiter. The company reported that Web stores saw 51 million unique visitors, a jump of 50 percent from the 34 million visitors in 2000.

Retailers offered free shipping and aggressive coupons and discounts to lure shoppers. In a new trend, several online retailers had coupons on their Web sites that were only good for purchases made at a physical store. Fairly good weather in November and December also made it easier for people to shop at malls and retail stores instead of online.

The recent dot-com die-off resulted in a narrower field of online retailers, leaving mostly bigger companies that have been around longer--and generally have had the time and money to beef up their own systems to improve customer service.

Those improvements have paid off, with the Goldman Sachs report finding that 86 percent of online shoppers say they were satisfied with their online experience, and 24 percent say it was better than the year before. In past years, customers frequently reported that e-tailers had sold out of popular items, traffic bogged down sites, or retailers failed to deliver goods on time.

Online shoppers who needed help with their purchases in 2000 had problems getting it, Jupiter said. The research firm said that of the 250 e-commerce firms it studied, 70 percent failed to resolve basic customer requests online within six hours. Customers who shopped at online-only stores endured the worst treatment, according to the study.

This season saw a surprising number of last-minute shoppers, as opposed to earlier years when customers concerned about getting gifts delivered on time tended to push traffic figures higher early in the season and drop off significantly as the holidays approached. This past season, however, last-minute shoppers bought $54 million worth of goods on Christmas Day, up 26 percent from the previous year, according to Bizrate.