E-tailers cheer holiday sales surge

Analysts are pegging the season as one of the worst in years, but online shopping sites saw big sales gains during the holidays, according to new studies.

Margaret Kane Former Staff writer, CNET News
Margaret is a former news editor for CNET News, based in the Boston bureau.
Margaret Kane
3 min read
Consumers' holiday spending pie may have been smaller, but the online shopping slice is getting larger, according to new studies.

U.S. shoppers spent more than $13 billion online in the 2002 holiday season, according to new reports from Jupiter Research and Nielsen/NetRatings. The figures come at a time when retailers are reporting dismal numbers and analysts are pegging the season as one of the worst in years. Chains including Federated Department Stores, Wal-Mart and Target all reported weak sales coming off the Christmas rush.

Online sales, meanwhile are seeing big gains from a year ago. Jupiter said holiday sales should exceed its forecast of $13.1 billion, up 17 percent from a year ago. The report from Goldman Sachs, Nielsen/NetRatings and Harris Interactive put the growth even higher, saying the final number would be around $13.7 billion, up 24 percent compared with a year ago.

According to the Goldman Sachs-Nielsen study, consumers moved around 2 percent of their holiday budget to online stores from brick-and-mortar stores and catalogs.

"Consumers are making a subtle shift from exclusively purchasing from brick-and-mortar retail stores to making a few of their purchases online," said Ken Cassar, a Jupiter analyst. "Three or four years ago the online shopper was just dipping a toe in the water. But we're increasingly seeing the Internet become an important channel during the season."

Online shopping took off in a big way a few years ago, when stores offering everything from pet food to perfume opened up on the Web. Many have since gone out of business, and multichannel retailers, which operate both online and offline, and whose brands are likely more familiar to consumers, have since taken over a lot of the business.

But there are a few signs that the online companies are beginning to regain some ground, Cassar said. Overstock.com reported sales of $25.2 million between Nov. 29 and Dec. 25, up from $9.5 million in the year-ago period. And eBags reported that holiday sales increased 101 percent from a year ago, although it did not give specific financial data.

The king of Internet stores, Amazon.com, has not yet released financial details about the holiday season, but said last week that consumers ordered 56 million items worldwide from Nov. 1 to Dec. 23, up from 37.9 million holiday orders last year.

"I get asked consistently (to) point to sites that don't do a good job, and really there aren't many because the ones who don't do a good job aren't there anymore," said Michelle David Adams, vice president at online measurement firm ComScore Networks. ComScore surveys consumers at e-commerce sites as they make their purchases. The company is still preparing final figures, but estimates that total 2002 online spending, excluding travel, will be around $43 billion, up from $33.7 billion in 2001.

The shift from offline sales to online sales may not resurrect the dot-com heyday, but it does emphasize the Web's importance as a sales channel, analysts said.

"Based on the results of this holiday season I do think e-commerce execs campaigning for more budget dollars (at multichannel retailers) will be armed with compelling information," Jupiter's Cassar said. "This season it's clear that we saw a shift of brick-and-mortar sales to the Internet, so it's easier to justify their budgets."