Online retail sales reach $7 billion this holiday

Holiday shoppers spend record amounts online in the midst of a banner year for retailers, according to several studies.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read
Holiday shoppers spent record amounts online in the midst of a banner year for retailers, according to several studies released today.

Jupiter Communications estimated today that consumers spent $7 billion online between Nov. 1 and Dec. 31, up from $3.1 billion for the same period in 1998. Jupiter originally projected that consumers would spend $6 billion during the holiday season.

A separate survey from PC Data Online reported that online consumers spent $5 billion during the seven-week period between Nov. 14 and Dec. 31. In addition, the Department of Commerce estimated that consumers spent $259.6 billion online and off in December, up 9.7 percent from the previous year.

Despite the big season, e-commerce remains just a drop in the overall bucket of consumer spending. According to the studies, most Internet users did their shopping offline.

"E-commerce is still an extremely small portion of holiday spending," said Cameron Meierhoefer, an e-commerce analyst at Reston, Va.-based PC Data Online. "This season has taught us that there is still a lot of room for growth."

The shopping numbers come as many e-commerce stocks face mounting pressure from investors who are eager to see companies turn revenues into profits. Many online retail stocks, including bellwethers eBay and Amazon.com, were up in afternoon trading, but in general such stocks have sunk since early November. Barnesandnoble.com, eToys and CDNow, for instance, are all trading near their 52-week lows.

Even if they are upsetting investors with their continued losses, the embattled e-tailers could take some comfort in the general sense of

Top categories by Net spending
10/31 - 1/2 (in thousands)

Computer hardware $1,205,670
Toys $675,650
Travel $640,254
Computer Software $474,632
Electronics $410,332
Apparel $373,371
Music $252,591
Books $248,095
Videos/DVD $208,563
Home and Garden $191,975
Source: PC Data Online
customer satisfaction online. Despite widely publicized problems at Toysrus.com and other e-tailers over the holidays, Jupiter's study indicated that 90 percent of consumers were largely satisfied with their online holiday shopping experiences, up from 74 percent last year.

"I was amazed that customer satisfaction was so high," Jupiter digital commerce analyst Ken Cassar said. " A lot of merchants realized how important it was not just to generate sales, but to conduct transactions that would build relationships. They did things like improve their sites and increase their customer service staffing."

But not everyone was happy with the online shopping experience. According to Jupiter, 24 percent of online consumers complained about items being out of stock, while 21 percent were upset with high shipping-and-handling charges. Other consumers also complained about slow site response.

Jupiter surveyed 810 online shoppers from Nov. 1 to Dec. 31.