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Holidays a boon to e-commerce

As department stores get ready for the holiday buying bonanza, online retailers are preparing for what analysts say will be a busy season on the Net.

3 min read
As department stores gear up for the traditional holiday buying bonanza, online retailers are waiting to see how many Christmas shoppers will forgo the usual lines at the mall and buy their presents online.

Analysts and online merchants are gearing up for a busy holiday season. According to analysts, online retailers will be the beneficiaries of several factors drawing consumers into their virtual stores. Online merchants will benefit from the traditional surge in sales in the fourth quarter, along with a growing confidence in the security, reliability, and convenience of electronic commerce.

"There will be fourth-quarter madness, when we as consumers buy a lot of stuff," said Kate Delhagen, an analyst with Forrester Research. "We're seeing a lot of repeat buyers in the market now who shopped online last Christmas, kicked a few tires, saw that it worked, and said, 'This is really convenient.'"

Delhagen expects fourth quarter retail sales to bring in a minimum of $750 million in revenues, and said that she wouldn't be surprised if sales exceed $1 billion. She predicted that the "usual suspects" are going to dominate the market this season: personal computing products, travel, entertainment, books and music, flowers, and apparel and footwear.

While those numbers seem impressive, even if online revenues top $1 billion, it will hardly make a dent in the estimated $650 billion in revenues that traditional retailers will pull in this season. "It's an emerging channel," Delhagen said. "Even if it's not a trillion-dollar business, down the road it's likely to be a many-billion-dollar business."

Two major retailers are focusing their efforts on cyberspace just in time to capitalize on the boom in sales this winter. Hallmark launched its online store today, in time to cash in on those who want to send their holiday cards via email this year.

The Hallmark Connections shop offers email holiday and greeting cards, personalized email, a reminder service for upcoming dates, and advance delivery of greeting cards. The move by Hallmark--which doesn't even offer a catalog business--signifies the lure of the Internet, even to companies that deal mostly in paper goods.

Although Hallmark will sell paper greeting cards over the Net, Delhagen said that it is really "counting on electronic greeting cards" to appeal to online shoppers.

Disney Online has introduced several offerings to capitalize on the holiday shopping rush, including new holiday merchandise on its shopping channel and Web sites for two Christmas-release movies.

Disney's shopping channel offers customized Disney merchandise as well as holiday-themed products. Disney Online's shopping department is organized like a "real" store, with different departments and a virtual shopping cart where customers can gather their selections and pay for it all in one transaction.

The Little Mermaid site features online games, a "treasure cove" of downloadable wallpaper and sound clips, contests, and service that allows for purchasing movie tickets online. The site for the yet-to-be-released film Flubber offers visitors access to "Club Flub," where they can email Flubber postcards and sign up for email alerts about where and when the movie is playing.