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Internet Sales Expected to Surge 20% This Holiday Season

cnbc.com
Monday, 11 Dec 2006 | 2:59 PM ET

Online sales this holiday season are expected to jump roughly 20% from a year earlier, as more consumers opt to shop from their desktops instead of dealing with parking spots and long lines.

Cyber Sales
This Monday could be the busiest online shopping session of the season, with Patti Freeman Evans, Jupiter Research Senior Analyst, Retail Industry and CNBC's Carl Quintanilla

Online holiday sales are on track to reach $32 billion for 2006, up about $5 billion, or 18% to 20%, from last year, according to Jupiter Research, a New York-based market research firm.

“Every indication is that we are going to be very close to that, if not above,” Patti Freeman Evans, a senior retail industry analyst with Jupiter, told CNBC’s “Squawk Box.” “It is very positive (but) it’s not totally above expectations.”

The biggest drivers? More consumers are comfortable shopping on the Internet, and they're shifting more of their spending online. The average holiday shopper is expected to spend $281 on the Web this year, up from $251 last year, according to Evans.

Convenience also outweighs other factors, such as gas prices, in encouraging shoppers to use the Internet.

The next few days are expected to be the busiest, with the heaviest day approaching $700 million in sales, according to ComScore Networks, a market research firm in Reston, Va.

Thus far into the holiday shopping season, total online retail spending has reached $15.6 billion, up 25% from the prior year, according to ComScore Networks.

Online sales usually taper off after this week, as consumers begin to fret about whether their shipments will arrive on their doorsteps in time for the holidays.

So which online retailers are ringing up the most sales?

While Amazon.com takes the top spot, only three of the top ten online retailers exist soley on the Internet. The remaining seven also have brick-and-mortar stores.

Dell.com ranks second, followed by Yahoo.com ; Walmart.com; JCPenney.com; Ticketmaster.com; Apple.com; VictoriasSecret.com; BestBuy.com; and Circuitcity.com.

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Among those generating the highest online sales, some retailers are generating growth rates in excess of 50%, led by BestBuy.com and Ticketmaster.

Many consumers are beginning to behave a lot more like they do when shopping in brick and mortar stores, such as waiting on a “virtual” line for specific sales to start.

“They are sitting on the sites waiting for those things to go live,” Jupiter’s Evans told CNBC’s “Squawk Box.”

She also said that online retailers are using search engine marketing and free shipping offers more aggressively.

"It is much more competitive out there," Evans said.

Retailers should also prepare for a post-holiday surge in web traffic, she says.

"Retailers should plan to have not only seasonal markdowns available after the holidays, but also new products at full price and high margin to take advantage of customers who want new merchandise after a long holiday season and those who are redeeming gift cards."

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