NEW YORK Online holiday sales hopped
More shoppers are buying online, especially when there's free shipping.
NEW YORK (AP) -- Online holiday sales, helped by free shipping offers, are turning out to be robust, according to several preliminary reports released Monday, providing a bright spot in an otherwise mediocre shopping season.
The double-digit percentage increases at online retailers far outstripped the slim increases estimated for sales in stores. After a better-than expected surge after Thanksgiving, sales at stores were disappointing throughout the season, despite aggressive discounting.
"Compared to an anemic holiday season [at stores,] this was a terrific holiday season for online retailers," said Ken Cassar, senior analyst at Jupiter Research.
Concern about profits
But Cassar warned that given that free shipping was an important driver of online sales, he is worried about companies' profits. He added that it will be hard for online retailers to wean themselves away from free shipping and handling, and consequently, they may have to increase prices as an alternative.
"Retailers that want to offer free shipping will have to make a difficult choice between increases in sales and in profit margins."
Jupiter Research announced Monday that e-commerce sales will exceed its original forecast of $13.1 billion, which would represent growth of more than 17 percent from the year-ago period, based on early reports from online retailers.
Now, Jupiter Research anticipates a 20 percent to 24 percent gain for the holiday 2002 season, which was from Nov. 1 through Dec. 31. It is expected to release final numbers in March.
A separate report from Nielsen/NetRatings, Goldman Sachs and Harris Interactive said that online spending jumped more than 24 percent to $13.7 billion, from Nov. 2 through Dec. 27, up from $11 billion in the year-ago period. That was in line with projections for sales increases in the low 20 percent range.
Based on surveys
The company based its data on surveys with a total of 9,000 online shoppers during the holiday period.
ComScore Networks Inc., which captures buying activity from a cross section of 1.5 million Internet users, said that online sales were up 20 percent to anywhere from $9.7 billion to $9.8 billion during the Nov. 1 to Dec. 31 period, according to preliminary reports.
According to BizRate.com's final holiday revenue tally, which was released late last month, online sales were up 23 percent to $7.92 billion from Nov. 25 through Dec. 25, compared with the comparable year-ago period. The shopping comparison site, which also tracks consumer spending across 2,000 Web sites, had forecast a 24 percent gain.
All holiday sales figures exclude the travel category.
This holiday season, 140 retailers offered free shipping deals, about 30 percent more than last year, according to BizRate.com.
BizRate.com also found that 39 percent of holiday online purchases were influenced by free shipping deals.
Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd., expects that sales at stores open at least a year, known as same-store sales, will be up only 1.5 percent for the November and December period. That would be the weakest increase since the same-store index started tracking the figures in 1970.