Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Following a November with web sales growing at twice the pace of in-store sales, the online channel came on even stronger in December, flying like a reindeer-driven sleigh to new heights—racking up 10 billion-dollar days by mid-December.
As the all-important holiday shopping season wore on, the differences between offline and online stores became increasingly apparent: While bricks-and-mortar stores started off well with a 6.7% year-over-year rise in November sales, non-store, mostly web, sales rose at double that pace, increasing 13.9%, according to the U.S. Department of Commerce.
And as December rolled around, the trend continued—but even more sharply favoring the web: As store sales grew a mere 2.9% year over year for the week ended Dec. 10, according to the International Council of Shopping Centers and Goldman Sachs, online sales flew like a reindeer-driven sleigh to new heights—rising 15% or more for the weeks ended Dec. 9 and Dec. 16, web measurement firm comScore Inc. reported. By mid-December, online retailing had racked up 10 billion-dollar days.
While post-recession e-commerce growth has consistently been in double digits since early 2010, some web merchants didn't anticipate the season's early strength. "Black Friday was a record day, and we more than doubled that growth on Cyber Monday," says Nathan Decker, head of e-commerce at sports gear retailer evo.com. "It surprised a lot of us. We kept hitting the refresh button at 9 p.m. that Monday, we couldn't believe how many sales were coming in." Black Friday and Cyber Monday are the Friday and Monday following Thanksgiving.
And the cheer didn't quickly peter out despite the early discount-driven sales. Through mid-December, holiday season e-commerce sales remained nearly 15% ahead of the 2010 holiday season, as sales for Nov. 1 through Sunday, Dec. 18, totaled $31.97 billion, up 14.95% from $27.81 billion in the comparable 2010 period, according to comScore, which makes estimates based on tracking the online activity of a panel of 1 million U.S. consumers.
Free shipping boost
Online retail sales topped $1 billion per day for four of the five workdays in the week ended Dec. 17 alone, comScore reported. Monday was the heaviest online shopping day that week with $1.13 billion in sales. Next came Friday, a day when 2,300 e-retailers took part in the Free Shipping Day promotion organized by FreeShipping.org, when shoppers spent $1.07 billion at retail web sites.
ComScore noted that 56.0% of online purchases carried no shipping charges for the week ended Friday, Dec. 16, reflecting a steady rise from previous weeks and up from 52.2% during the comparable period of 2010.
"This season has seen a continuation of the trend where an increasing percentage of transactions involve free shipping, as more consumers demand it and more retailers provide it," comScore chairman Gian Fulgoni said in mid-December. "During the week of Thanksgiving and Cyber Week we saw at least three in five transactions use free shipping, significantly higher rates than we've ever previously observed." Cyber Week refers to the week following Thanksgiving weekend.
The front-loading of free shipping offers and discounts showed up in slower year-over-year growth rates for online retail's big promotions in December compared with November. For example, Friday, Dec. 16—Free Shipping Day—was up 14% over 2010 and Monday, Dec. 12—which some marketers had hopefully dubbed Green Monday—was up 19%. By contrast, the Friday after Thanksgiving, often called Black Friday, saw online sales increase 26% over the same day in 2010, and sales the following Monday, often called Cyber Monday, were 22% ahead of the prior year. Through the first three weeks of December, Cyber Monday remained the heaviest online shopping day of 2011, at $1.251 billion.
Still, web merchants had much to cheer, especially compared to bricks-and-mortar stores. On a month-to-month basis, total retail sales increased 0.2% from October to November, whereas non-store retail sales, which mostly take place online, grew 1.5%, the Commerce Department says. The November estimates show that stores continue to lose ground to e-retailers during the critical holiday sales period. Non-store retailer sales accounted for 8.7% of total adjusted retail sales in November, versus 8.2% in November 2010 and 7.8% in November 2009.