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Online Shoppers Won't Miss Deals, Just Crowds

Tuesday, 20 Nov 2007 | 3:14 PM ET

For those who opted to stay at home on Black Friday, rather than brave the crowds, there’s good news: there will be plenty of bargains online this year.

Nearly 40 percent of holiday shoppers now buy online and that number is growing. A third of all online shoppers expect to do more of their shopping on the Web this holiday season than they did a year ago, according to a survey by online retail trade group Shop.org and BizRate Research, a unit of E.W. Scripps.

Forrester Research estimates U.S. consumers will spend $33 billion on Internet purchases between Thanksgiving and Christmas, up some 21 percent from last year.

This hasn’t been lost on retailers. They are offering plenty of Web-only discounts and exclusive merchandise -- not to mention the usual free shipping and gift wrap deals.

Retailers have also made great strides integrating the online and traditional store experiences. They know that even many of the consumers who buy products in a store began their shopping by researching purchases online.

Free Shipping Offers

Shoppers also know that free shipping is by far the most popular promotion, with nearly two-thirds of online shoppers – some 61.2 percent, according to a BizRate survey – saying that it's the promotion they would like to see this holiday season.

"Free shipping offers drive online sales more than any other promotion, which is why they remain popular with retailers," said Scott Silverman, executive director of Shop.org. "Unfortunately, shipping is not free for retailers. Merchants can minimize the financial impact of these promotions by carefully analyzing the conditions required for their customers to receive free shipping."

One variation on the free shipping offer is to allow online shoppers to pick up their items at the store. The National Retail Federation, an industry trade group, estimated 13.6 million people used retailers' "buy online, pick up in-store" features during the holiday season last year. That number could rise this year as more retailers offer this deal.

Such integration is meant to make shopping more convenient for consumers, said Scott Krugman, a vice president at the National Retail Federation. It also provides retailers with an opportunity to drive traffic into the store, and potentially win another sale, he said.

One retailer offering this option is Circuit City Stores. The company promises that shoppers who order $25 or more in items on its Website, can pick up their purchases at a local store within 24 minutes. If Circuit City misses the deadline, the customer gets a free $24 gift.

Each year, the online component becomes a "more important piece" of the holiday shopping picture, said George Whalin, president and chief executive of Retail Management Consultants in Carlsbad, Calif. And this year’s no different.

A Bright Spot

Whalin expects to see a 20 percent to 25 percent increase in online sales dollars.

That's a brighter picture than traditional retailers are expected to experience this year. According to the National Retail Federation, an industry trade group, total holiday sales are expected to rise 4 percent to $474.5 billion this year. That increase is below last year's and the average growth of 5 percent to 6 percent over the past four years.

That forecast contrasts with the rosy comments about the holiday season coming from online retailers such as Amazon.com , which said it is seeing a booming toy business, and online jewelry retailer Blue Nile , which recently raised its earnings forecast.

Consumers this year are more price sensitive than usual are often given concerns about the economy and rising energy prices. Online traffic to Black Friday advertising websites began its annual climb earlier this year than it did in 2006, according to data tracker Hitwise. These sites include bfads.net, gottadeal.com, and blackfriday.com, among others. Shoppers can also go to Websites such as Shopzilla, Shopping.comand NexTag to compare product prices.

This year, Bizrate is forecasting that a majority of online retailers are planning a special promotion for Cyber Monday this year, the first Monday after Thanksgiving.

Presumably, the idea -- coined by the retail trade group Shop.org in 2005 -- was that consumers went back to work Monday and used their employers' high-speed Web connections to track down all those items they didn’t find in the stores over the holiday weekend. Cyber Monday, however, is not necessarily the peak online shopping day. Last year, that distinction went to Wednesday, Dec. 13, according to comScore, a company that tracks online spending in the US.

Still, it is an important day for online shopping. BDO Seidman, an accounting and consulting firm, surveyed the chief marketing officers of leading U.S. retailers and estimated Cyber Monday will account for 12.3 percent of all Internet sales this holiday season.

"This year’s holiday survey of chief marketing officers demonstrates how Cyber Monday has become the online equivalent of Black Friday for America’s leading retailers," said Doug Hart, a partner in the retail and consumer product practice of BDO Seidman.

What will the heaviest shopping day be this year? The best bet is Monday, Dec. 10 or Monday, Dec. 17, according to Andrew Lipsman of ComScore. That guess is based on a combination of the number of shipping days before Christmas and the fact that online shopping tends to peak on Mondays and Tuesdays.

Christina Cheddar Berk is a News Editor at CNBC.com. She can be reached at christina.cheddar-berk@nbcuni.com.

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