December 29, 2009, 12:00 AM

Web Trumps Stores

Online retailing bounced back this holiday season, much more so than bricks-and-mortar stores. But not all e-retailers gained equally.

Online retail bounced back smartly during the 2009 holiday season, posting stronger gains than bricks-and-mortar retailers. The explanation is simple: More consumers shopped for gifts on the web this year, while fewer went to stores and malls, according to retail monitoring companies.

But online shopper behavior showed the effects of the deep economic downturn, as consumers shopped surgically for deep discounts and free shipping. Some new patterns emerged, including earlier online shopping on Thanksgiving weekend and the growing weight of social networks like Facebook and Twitter in guiding purchasing decisions.

And larger online retailers appeared to be taking market share, at least early in the holiday season. The top 25 online retailers gained 13% in share of dollars spent on the web in November, while smaller and midsized retailers gave up 10% of their share, reported comScore Inc., a web measurement firm that bases its estimates on the actual online activity of hundreds of thousands of U.S. consumers.

“It’s pretty clear that the larger, established retailers have an overall competitive advantage during a recession,” says comScore chairman Gian Fulgoni. “Not only are they better equipped to meet the price demands of cash-strapped consumers, but they are also able to maintain their marketing investments and gain consumer mindshare.”

Online retail sales were up 4% from Nov. 1 to Dec. 13, to $20.721 billion this year versus $20.017 billion during the same period last year, comScore reported. That included an all-time record week for online retail sales of $4.74 billion during the week ended Dec. 13, exceeding the previous high of $4.70 billion recorded during the week that ended Dec. 16, 2007.

E-retailers were faring better than their store counterparts, as overall retail sales, excluding autos, grew only 1.3% in November, the U.S. Commerce Department reported.

The shift was particularly evident over the Thanksgiving period. Web retail sales increased 7.4% to $2.61 billion from $2.43 billion during the same period last year, according to comScore. But total retail sales for that period increased only 1.6%, says ShopperTrak, which monitors store traffic.

The difference in traffic trends was even more striking. ShopperTrak says foot traffic to malls and stores declined 1.1% over the Thanksgiving weekend, while comScore reports that the number of consumers who shopped online during that timespan grew 6% to 8.7 million from 8.2 million last year.

An early start

The online shopping began earlier than usual, with traffic to e-retailing sites starting to spike on the Wednesday evening before Thanksgiving, reports web analytics vendor Coremetrics.

Online sales on Thanksgiving were up 10%, comScore reports, and that was a result of more retailers offering deals on the holiday itself, a day when retail stores were closed, says Fiona Dias, executive vice president of strategy and marketing at e-commerce technology provider GSI Commerce Inc.

Then traffic to GSI’s retail clients picked up early on the Friday after Thanksgiving, Dias says. “The momentum of web-only Thanksgiving sales carried over into the wee hours of Black Friday,” Dias says, using the term some give to the Friday after Thanksgiving.

She noted a similar trend as the weekend came to a close. Some retail chains held off promoting their Monday-after-Thanksgiving sales until Sunday evening, to avoid undermining store sales, but once those offers went live, traffic to e-retail sites shot up early Monday, Dias says.

Whenever they shopped, online consumers were looking for deals. For the week that included the Thanksgiving weekend, 44% of online purchases included some type of free or discounted shipping offer, up from 40% during the same period last year, comScore says. Visits to coupon sites were up 17% over last year on the day after Thanksgiving, comScore says, another sign of consumers using the web to stretch their shopping dollars.

Retailers offered deeper discounts, says product recommendation technology vendor MyBuys Inc. Typical online discounts increased to just over 26% in November, up from 24% last year, says MyBuys, based on data from its 150 e-retail clients.

Another trend that emerged from the holiday season is the growing importance of online social networks, blogs and forums. Among consumers researching and buying holiday gifts online, 28% said social media influenced a purchase decision, compared with 11% who said they were guided by a customer-generated product review, 7% by an expert review and 6% by a Facebook message, comScore says.

Observed comScore’s Fulgoni, “We are getting our first real glimpse at the impact social media will play on commerce as we enter the next decade.”

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