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Online Retail Sales Up 12% and Best Yet to Come

Wednesday, 8 Dec 2010 | 1:35 PM ET

Consumers are continuing to point, click and buy.

The latest read on online holiday shopping from Comscoreshows a 12 percent increase in spending in the first 35 days of the November through December shopping season compared with the same period a year ago.

And more than half of the shoppers took advantage of "free shipping" offers, according to ComScore.

“Cyber Monday started the week off with a bang, but online spending growth softened during the latter part of the week and into the weekend,” said ComScore Chairman Gian Fulgoni, in a press release. “We anticipated that the post-Cyber Monday period would experience a slight hangover after many of the retailers’ most aggressive deals and promotions expired, but we can expect to see activity begin to pick up again next week as we get into the middle part of December when online buying typically peaks.”

That's right, we're gearing up for what has historically been the busiest online shopping period. And this year retailers are expected to pull out the stops for Free Shipping Day, which is a shopping event modeled after Cyber Monday, which began as a day for the industry to promote online shopping with special deals and offers.

Consumer Nation - Holiday Central Edition - See Complete Coverage
Consumer Nation - Holiday Central Edition - See Complete Coverage

Free Shipping Day began two years ago when Luke Knowlesrounded up a number of retailers to offer special deals on Dec. 18, 2008. Knowles was running a Web site the listed free shipping deals, and thought it would be a great way to promote how late into the holiday season shoppers can purchase products online.

This year, the date to remember is Dec. 17, and while many price comparison and coupon Web sites are featuring information on the deals being promoted for Free Shipping Day, Knowles' site freeshippingday.comis organizing the event. The site claims to have more than 1,100 merchants participating this year, up from 750 retailers last year, and 250 in 2008.

"Black Friday and Cyber Monday are for the early birds, free shipping day is for the procrastinators," Knowles said. "This is their last chance to get a great deal too."

Accept No Substitutions!

Although there has been a shift to online shopping for many years, there may be other factors driving shoppers online. One factor could be with tight inventories, shoppers are forced to go online to hunt down their perfect gift. Personally, I know that has happened to me over the past two weeks.

If you look at one important holiday category, toys, you'll see why. Market researcher NPD Group came out with a report today that showed that the majority—some 62 percent—of toy purchases are planned, with buyers setting out knowing what toy they want to buy. More than three quarters of the buyers surveyed made a planned purchase, including where they hoped to purchase it.

And if that product's not there, 42 percent said they would go to a different store to find it, and 9 percent would go online. Only 22 percent of buyers said they would look for a different product in the same store.

"The fact that there is less substitution of another item if the original item isn't found is a real wake-up call for retailers," said Anita Frazier, industry analyst at NPD Group.

This underscores how important the correct inventory choices are for retailers because consumers have more power to get exactly what they are want.

In my case, I headed to another store after I didn't find the items I was hunting for, and that store also didn't have those items. After returning home, I quickly found it online.

Budget Factor

Then, there is the budget factor. Consumers appear to be spending more this holiday season but they haven't lost their taste for a good deal.

A survey by StrategyOne found that 74 percent of Americans feel that the easiest way to complete their gift purchases is online and 52 percent said they found the best deals online.

(In a funny twist, 59 percent said they still preferred to do their holiday shopping in stores, owing to the fact that certain aspects of the retail experience—such as capturing that "holiday spirit" can't be matched online.)

That study also found that the majority of consumers have been a bit disappointed by the deals that are out there and they are waiting to see if prices fall further as the holidays approach.

Questions? Comments? Email us at consumernation@cnbc.com

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