November 10, 2009, 12:00 AM

Promotions boosted PayPal’s share of ’08 holiday web sales, comScore says

Online retailers including Dell, American Eagle Outfitters and Overstock.com garnered a bigger share of their online sales through PayPal last year while offering special promotions tied to PayPal payment transactions, comScore says in a new study.

Zak Stambor

Managing Editor

Online retailers including Dell Inc., American Eagle Outfitters Inc. and Overstock.com Inc. garnered a bigger share of their online sales through PayPal last year while offering special promotions tied to PayPal payment transactions, comScore Inc. says in a new study.

The study, “Alternative Payment Types Online: The Rise and Maturity of PayPal and Others Across the e-Commerce Landscape,” compared PayPal’s share of online sales at several major online retailers during the fourth quarter of 2008, when retailers in the study offered PayPal holiday promotions, with PayPal’s share of online sales during Q3 of 2008 before the promotions began.

The Q4 2008 PayPal promotions included an offer on Overstock.com for 15% cash back on a $100 purchase processed through PayPal. As a result, PayPal’s share of Overstock’s Q4 sales rose by 24% to 18.6% from 15% in Q3, comScore says.

“PayPal’s aggressive promotion strategy during the 2008 holiday season helped the popular online payment method carve out a significantly higher share of wallet at several major retailer sites,” says Matt Archer, comScore senior manager, financial services.

Among other retailers cited in the study, Dell increased its share of online sales processed through PayPal to 7% in Q4 2008 from 1.9% in Q3, after it positioned PayPal at the top of its payment options on its checkout page; and American Eagle Outfitters boosted its share to 8% from 3%, comScore says.

The study also found that a promotion on Wal-Mart Stores Inc.’s Walmart.com that offered $20 off a PayPal purchase of $50 or more led to 9% of Walmart.com’s Q4 2008 sales being processed through PayPal. A comparison with Q3 wasn’t available because Walmart.com didn’t offer PayPal until October 2008, the study says.

This year, PayPal launched a holiday promotions program on Nov. 3 that will run through Jan. 12. Among this year’s promotions:

  • A $20 cash-back offer on purchases of $100 or more at BestBuy.com from Nov. 10 through Nov. 16;
  • Savings of up to 20% on purchases made through PayPal at OmahaSteaks.com, SmartBargains.com and Southwest Airlines’ Southwest.com;
  • Free shipping to a customer’s chosen Wal-Mart store for all online orders on Walmart.com processed through PayPal (Walmart.com usually offers free site-to-store shipping only on select items); and
  • A free-shipping offer from Beauty.com that ran Nov. 3-9.

    PayPal is a unit of eBay Inc.

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