Eye-catching promotions like free shipping and greater use of comparison-shopping Web sites are driving consumers to their computers, where they are spending vast sums online this holiday season.
Comparison-shopping site PriceGrabber.com reported that as of Monday, click-throughs to merchant Web sites were up 83 percent over a year. Last week, Hitwise, a competitive intelligence service that monitors Internet use, said that as of Dec. 3, more than 10 percent of all visits to the Internet were to a shopping Web site.
And on Friday, research firm comScore Networks Inc. reported that online holiday shopping between Nov. 1 and Dec. 9 was up 23 percent over the same period a year ago, to $12.75 billion. The firm estimates that non-travel online spending for the November-December period will exceed $19 billion, a 24 percent gain over the 2004 holiday period.
The data are in line with earlier forecasts that predicted a robust online shopping season and give traditional store chains reasons to worry.
“A lot of retailers on Black Friday reported flat comp-store sales,” said Sucharita Mulpuru, senior retail analyst at Forrester Research. “A lot of retailers are struggling in their brick-and-mortars. [Pure play Web] retailers are definitely taking market share away from the traditional retailers.”
PriceGrabber.com said some of the biggest areas of online growth were those goods with the highest price tags, namely big-screen televisions and jewelry. Consumers are spending an average of $1,900 online for a plasma TV and $2,400 for a projection TV.
Meanwhile, the popularity of purchasing expensive jewelry online continues to grow, according to PriceGrabber.com. Click-throughs to jewelry Web sites are up 240 percent this holiday season, and the average order totals more than $1,400.
That’s old news to Mark Vadon, chief executive officer of online jewelry retailer Blue Nile Inc. Just in the first three quarters of the year, the company said transactions of more than $20,000 grew 72 percent as consumers get more comfortable with parting with credit card information via the Web.
“They are not first-time e-commerce shoppers,” Vadon said. “What we’re seeing in the luxury space are people who were first shopping online in the mid-1990s. People are feeling very comfortable with high-ticket purchases on the Web. The mega-price points have been doing well.”
What Vadon, as well as other online merchants, also are seeing is the same scenario that plays out in stores–consumers waiting until the last minute to do their holiday shopping. And shopping Web sites have tried to accommodate them.
Estimates for the holiday shopping season indicate that overall sales–including both stores and online–are expected to increase by 5 to 6 percent. That compares with a 6.7 percent increase last year.
To emphasize the significance of consumer confidence to the economy, and to direct some of the credit for economic growth toward President Bush, Commerce Secretary Carlos M. Gutierrez visited Westfield Fox Valley Mall in Aurora on Monday, along with House Speaker Dennis Hastert.
“We have an economy that’s growing three times as fast as the European Union, it’s growing faster than any other industrialized economy in the world, and we should feel very proud of that,” said Gutierrez, who stopped in at a sporting goods store to buy a Washington Nationals baseball cap, while Hastert bought a Cubs hat.
Much of the excitement this season, however, is in Internet sales. No one is quite sure when the last big day for online purchases will be, but for some merchants it may be tied to their shipping policies.
To keep the consumer at the computer, rather than at the mall, free shipping offers from online merchants have been the rule, rather than the exception. However, many of the offers will expire this week.
“They don’t want to underdeliver but they don’t want to overpromise,” said Patti Freeman Evans, an analyst with Jupiter Research in Darien, Conn.
For instance, online merchant eBags Inc.’s holiday sale is “deck the halls, avoid the malls.” Until midnight Wednesday, it is offering 10 percent off plus free shipping on orders of $35 or more. At RedEnvelope Inc., a free shipping offer ends Friday. Amazon is taking orders for free supersaver shipping through Friday. Lego is offering reduced two-day shipping fees through Dec. 20. L.L. Bean asks customers to place orders by Dec. 22 for free shipping.
“The smart online merchants realized that last-minute shipping is key,” said Rob Small, marketing vice president at PriceGrabber.com. “A lot of the smart merchants recognize they can still get a lot of business that last week.”
Return policies also have been made more generous. Whether it’s jewelry, a karaoke machine or a bicycle trailer, many Web merchants have extended the dates by which purchases must be returned. At most sites, goods bought after Nov. 1 can be returned until late January.
