December 21, 2010, 4:34 PM

Free shipping drives a surge in holiday orders, Channel Intelligence says

Average order values fell as consumers shopped among more sites with free shipping.

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A sharp increase in the number of retailers offering shipping deals helped boost online sales by 24% for the seven-day period through Monday, Dec. 20, Channel Intelligence Inc. said today. Channel Intelligence based its figures on its Holiday Index of 24 online retailers that account for 11% of total U.S. online retail sales and have been operating a retail e-commerce site for at least a year.

“We’re seeing a lot of free-shipping offers from retailers that we haven’t seen previously,” says Alan Fulmer, executive vice president and co-founder of Channel Intelligence,  a provider of online marketing and e-commerce services to retailers and manufacturers.

The broader number of free-shipping promotions appeared to induce shoppers to buy in smaller amounts from a larger number of retailers, since shoppers apparently didn’t feel they needed to limit purchasing to those that didn’t charge for shipping, Fulmer adds. As a result, the increase in sales coincided with a 25% year-over-year increase in the number of online orders and a 2.4% drop in average order value, to $117.06 from $119.91.

Fulmer notes that a major boost in shipping offers coincided with Free Shipping Day on Friday, Dec. 17, when more than 1,500 retailers participated in the marketing event organized by FreeShipping.org, up from 750 last year.

The free-shipping offers are also getting more generous, Fulmer says. One retailer, he adds, is promoting on its web site this free shipping offer: order by 3 p.m. on Thursday for delivery on Friday, Christmas Eve. Another promotion offered 2-day air shipment for $4. Channel Intelligence doesn’t reveal the names of the retailers in its index.

“Free shipping offers seem to be things really driving consumers to buy,” Fulmer says.

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