Three surveys suggest that online retailers fared well during the holiday season, despite the gloomy economic news that dragged down sales in stores. Online sales rallied in the final week before Christmas, an indication consumers got the message from e-retailers that even orders placed late in the holiday season would arrive in time for Christmas.
Online sales grew 25% over last year in the five-day period that ended Friday, Dec. 21, according to web measurement firm comScore Inc. “With some online retailers offering deliveries before Christmas for orders placed by Dec. 22, and in-store pickup available for orders placed on Christmas Eve, we expect to see above average growth rates continue through the holiday,” says comScore chairman Gian Fulgoni.
Online sales totaled $26.29 billion from Nov. 1 through Dec. 21, up 19.3% from $22.04 during the same period last year. ComScore has predicted online holiday sales will grow 20% for November and December to $29.5 billion.
E-commerce sales nationally were up 22.4% from the Friday after Thanksgiving through midnight Dec. 24, according to the SpendingPulse report from the MasterCard Advisors unit of payment card company MasterCard Worldwide. That contrasted with overall retail spending growth of 3.6%, which falls to 2.4% when gasoline sales are stripped out, according to the SpendingPulse report. The report includes all payment forms and, while based in part on activity in the MasterCard network, does not reflect MasterCard’s financial performance.
Data from payment processor Chase Paymentech suggests online spending peaked Tuesday, Dec. 18, the date many online retailers had set as the deadline for delivering orders by standard shipping in time for Christmas. The Chase Paymentech Pulse Index, compiled from actual sales by 10 of the top 30 online retailers, recorded $169 million in sales and more than 3 million orders on Dec. 18, pushing the index 42% higher than on the busiest day in 2006, which was Friday, Dec. 15.
The Chase Paymentech results, which are tracking nearly 30% higher for the season, are encouraging for e-commerce as a whole, because they come from larger, more established merchants, says analyst Sucharita Mulpuru of Forrester Research. “If even mature merchants can pull a rabbit out of the hat, the story must have been even stronger for some smaller merchants,” she says. She predicts strong online sales through New Year’s Day, as shoppers look for discounts. “For some retailers, up to 10% of their holiday sales total can come after Christmas, which is a testament to the shoppers who wait for sales.”
Patti Freeman Evans, an analyst at JupiterResearch, says some retailers are reporting lower average order values this year, an indication consumers may have taken advantage of the unrestricted free shipping offers that more e-retailers promoted this year. Those offers meant consumers did not have to add additional items in some cases to get free shipping.
Evans also points to data from web measurement firm Hitwise showing that traffic to retail web sites remained strong through Sunday. That traffic could have prompted more sales for retailers using their web sites to promote in-store sales or those, including Sears and Best Buy, that encouraged consumers to order online for in-store pickup.
The holiday season results show that online retailers are rapidly taking market share away from bricks-and-mortar stores, says Tim Boyd who follows Internet stocks for American Technology Research, which advises institutional investors. “There’s no question that consumers in the U.S. are much more inclined to buy online and to visit multiple sites before purchasing things than ever before,” Boyd says.
He notes investors are bidding up the stocks of e-commerce stocks in anticipation of further growth, with Amazon.com, No. 1 in the Internet Retailer Top 500 Guide, trading at a stock price of 57 times expected 2008 earnings and online jeweler BlueNile.com, No. 49 in the Internet Retailer Top 500 Guide, at 56 times. By contrast, store-based retailers like Wal-Mart and Target trade at 14 times 2008 earnings. Boyd predicts retail chains will pour more development dollars into developing their web sites in coming years. Walmart.com is No. 13 in the Internet Retailer Top 500 Guide and Target.com No. 19.
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