January 1, 2011, 12:00 AM

Online holiday sales roar to the finish line as e-retailers rake in $5 billion in best week ever

At presstime for the January 2011 issue of Internet Retailer magazine, online holiday sales produced the strongest week ever for U.S. Internet retailers for the seven days ended Dec. 17, comScore reported. The strength of holiday sales, both online and offline, led the National Retail Federation to up its estimate of November and December increases.

If the 2010 holiday season is any indication, 2011 should be a happy new year for online retailers.

Online holiday sales were up 12% from the previous year as of Dec. 17, at $27.46 billion since Nov. 1, reported web measurement firm comScore Inc. That represents a significant improvement from a 4% increase in e-retail sales during the 2009 holiday season. And the week ended Dec. 17 was the strongest ever for U.S. web retailers, comScore says.

MasterCard Advisors’ SpendingPulse, which tracks purchases made with all forms of payment, says online sales through Dec. 11 were up 13.5%. Receipts were up 15.3% through Dec. 13 for retailer clients of e-commerce technology provider MarketLive Inc. “Merchants are ecstatic this season,” says MarketLive chairman Ken Burke. “The holiday is exceeding their expectations.”

The strength of holiday sales, online and offline, surprised many analysts. The National Retail Federation last month revised its forecast for November and December total retail sales to 3.3% from 2.3%. Analyst Jeffrey Grau of eMarketer raised his online holiday growth forecast in mid-December two percentage points to 16%. “The strength of online holiday sales—and total retail sales for that matter—to date has caught me and other analysts by surprise,” Grau said.

Several e-retailers reported stronger-than-expected holiday sales. Sales were up 33% from Thanksgiving through Dec. 19 at eBags.com, says Peter Cobb, co-founder and senior vice president. December sales were 15% ahead through Dec. 17 at Wine.com, says president Rich Bergsund.

A strong Thanksgiving weekend was followed by the biggest day ever the following Monday at DrsFosterandSmith.com, says Gordon Magee, the pet goods e-retailer’s Internet marketing and media manager. “We are riding a wave of optimism and encouragement right now about where our sales levels have been over the holidays and where we project them to be following the holidays,” he said in mid-December.

The Thanksgiving week sales blast—U.S. e-retailers sold $4.53 billion from Monday, Nov. 22, to Monday, Nov. 29, comScore says—may have taken sales from the following weeks. For example, from Thanksgiving through the following Monday, sales growth among ChannelAdvisor Corp. e-retail clients was 26%, says CEO Scot Wingo. But sales were up only 8.8% during December’s first week.

Carl Steidtmann, chief economist at Deloitte Research, says the early-season surge reflected consumers’ pent-up demand and renewed confidence. “November sales were quite good and above our expectations,” he said in mid-December. “Since then we’ve seen a slowdown, but the strong opening to the season fits with the sense that there has been pent-up demand among consumers.”

DrsFosterandSmith.com also saw sales growth dip in the weeks following the Monday after Thanksgiving, or Cyber Monday, Magee says. “Predictably, you can’t maintain that level of sales since it was a record day for us,” he adds. “Sales have tapered off from that level, but we are very encouraged by what we are seeing this season.”

Many retailers were encouraged the week of Dec. 10-17 when comScore says e-retail sales totaled a one-week record of $5.15 billion, up 14% from the same week in 2009. Sales surpassed $900 million on four days during the Dec. 10 week, but none touched the billion-dollar mark reached on Cyber Monday.

Discounts also were less drastic this year, experts say. “The breadth and size of the discounts are not anywhere near where we saw them in 2007 or 2008,” Steidtmann says. Adds Burke, “I don’t see our merchants over-discounting,” in part because strong early sales meant less inventory to move later in the season. Achieving record sales without deep discounting is an especially encouraging sign for web retailers.



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