Online retail sales in the U.S. this holiday season will increase 15% year over year, with growth largely coming from consumers shifting more of their gift-buying budgets from stores to the web as they seek to stretch their dollars, according to an analysis released today by Forrester Research Inc.
Consumers in November and December will spend $59.5 billion online, up from $51.7 billion a year ago, estimates Forrester analyst Sucharita Mulpuru in the “U.S. Online Holiday Retail Forecast 2011” report. Her growth projection is a bit more bullish than one made in September by Kantar Retail, which estimated October through December sales would hit $60.4 billion, an increase of 13.5% from the year earlier period.
Mulpuru says the proliferation of web-enabled mobile devices such as smartphones and tablet computers will contribute to the increase in online sales. Those devices will help consumers compare prices and aid in the shopping process. 30% of smartphone owners say they use their phones to research products they are considering purchasing at least once a month, and 50% of table computer owners say they use them for product research, Forrester says. 58% of online adults say they are more price-conscious today than a year ago and nearly half (48%) say they find better values and deals with e-retailers.
“The fundamental strengths of online, coupled with economic uncertainty, the need to spend cautiously and continued supply-side investment will result in yet another strong growth year for online holiday retail sales in 2011,” Mulpuru writes.
Offering free shipping and price incentives early in the season is increasingly critical to capturing holiday sales, Mulpuru says. She says consumers will see aggressive promotional activity from e-retailers, especially from Thanksgiving through the following Monday, commonly referred to as Cyber Monday. Online sales on Cyber Monday topped $1 billion last year, the single largest day for online sales ever, according to comScore Inc.
Mulpuru says e-retailers will make free shipping offers the cornerstone of their promotional plans this holiday, citing a projection from online retail trade group Shop.org that 92.5% of online retailers will offer free shipping at some point during the holiday season. 72% of the top 100 e-retailers ranked in the Internet Retailer Top 500 Guide this week offered some form of free shipping, down slightly from 73% last week, but up from approximately 67% during the corresponding week last year, according to a canvas of those e-retailers’ web sites, promotional e-mails and newsletters by the editors of Internet Retailer.