November 1, 2010, 12:00 AM

Cheery forecast: Most retailers expect to bask in higher holiday web sales this year

Close to two-thirds of retailers expect to see strong gains in holiday web sales, compared to less than half with such expectations a year ago, e-retailing group Shop.org says.

Nearly two-thirds of retailers, or 63.8%, expect their online holiday sales this year to rise by 15% over last year, Shop.org, a trade group for online retailers, reported in its eHoliday study released last month. By comparison, a year ago only 45.8% of retailers had similarly cheery holiday expectations, according to the study, which was conducted for Shop.org by researchers BigResearch.

Other recent reports also point to stronger online holiday sales this year, though forecasts vary.

The National Retail Federation, the retail trade organization that includes Shop.org, projects overall online holiday sales will grow 15% over last year, even as total retail purchases increase a tepid 2.3% during November and December. On the conservative end of forecasts, Kantar Retail senior economist Frank Badillo predicts a 6% increase in online sales and a 2.5% increase in overall retail sales.

Both organizations say they expect November and December to be highly promotional and discount-driven. "Price cutting is only going to get worse going into the holiday," Badillo says, because consumers remain cautious about overspending.

Consumers ready to buy

But there are also indications that shoppers will do more of their holiday shopping online this year. On average, they will spend $283.68 online in the fourth quarter, up 6% from a year earlier, according to the Online Spending Index released last month by eBillme, an online payment service provider.

The eBillme index also notes that 55% of consumers plan to shop online to avoid stores on the day after Thanksgiving, up from 38% last year.

E-retailers also can take heart from another survey that suggests several key indicators are trending up so far in 2010.

The survey of 87 e-retailers by Forrester Research and Shop.org says online average conversion rates, order value and web sales are all rising, while shopping cart abandonment rates are declining. 54% of respondents say their conversion rate is up, the average conversion rate being 2.9%; 47% say average order value is greater than last year, while only 27% say it is lower.

Retailers in the survey say web sales increased 12% during Q1 and 15% during Q2 compared with the same quarters in 2009. 31% report their shopping cart abandonment rate is lower than last year and 17% say it is higher.

To win over shoppers, many retailers are planning to be more aggressive this year with free shipping offers while also trying to better engage consumers on their own web sites and on social networks like Facebook and Twitter. According to the Shop.org eHoliday study, 84.8% of online retailers will offer free shipping at some point during the holiday season, and 31.4% say they will launch such offers earlier than last year.

The eHoliday study also notes 72.5% of retailers have invested in their Facebook pages in advance of the holiday season, while more than half report investing in at least one of the following areas in time for the holidays: cross-selling on their e-commerce site's product pages, site search, and customer ratings and reviews. And 43.1% say they're investing in a holiday season Twitter marketing campaign.

A growing number of retailers are placing their bets, many for the first time, on the mobile channel.

Apparel retailer Kenneth Cole released a mobile-optimized version of its web site in July after it realized 1.5% of web sales were coming from consumers using mobile devices. It hopes to boost holiday sales by giving consumers a more appealing buying experience with mobile than before, says Tom Davis, vice president of e-commerce at Kenneth Cole. A survey released in October says 27% of smartphone users will use their mobile devices to research or buy products this season.

allison@verticalwebmedia.com

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