Databank Shopping: E-tailers to see slower holiday growth

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Talk of terror and tough economic times have significantly tempered the online holiday tradition of heady growth. Online holiday sales, dragged down in part by the ailing travel sector, will grow just 11% this year to $11.9 billion, compared with a torrid 54% in 2000 and 126% in 1999, according to Jupiter Media Metrix. Excluding travel, hard hit by the Sept. 11 terrorist attacks, online retail sales would have been up 15%, said Jupiter senior analyst Ken Cassar.

Drilling below the forecasts and predictions, analysts are struggling to figure out how consumers will behave online this holiday season. A Jupiter Consumer Survey conducted the last week of September and first week of October found that 68% of consumers plan to spend between 10% and 50% of their holiday budgets online, compared with 63% in 2000 and 31% in 1999. The survey also found that only 14% of people planning to buy gifts online think they will spend less than 10% of their holiday budget online, compared with 18% in 2000 and 61% in 1999. The upshot? E-tailers will experience little growth, especially given the expected cutback in holiday shopping.

A little further down the road, analysts such as Forrester Research remain bullish on e-commerce, anticipating sales of $74 billion in 2002, or better if the economy recovers. Forrester's Consumer Technographics survey of 9,000 online consumers found 48% of Web buyers are high earners insulated from economic turmoil; they represent 52% of total online spending.

Mr. Cassar anticipates the apparel sector will continue to flex its muscle on the Web this holiday season, outpacing books due largely to the size of the category, $200 billion, vs. $25 billion for books. He noted a number of catalog apparel sites, such as Eddie Bauer (www.eddiebauer.com), have added views of the backs of garments. Others, such as Bluefly.com, will search for product available in specific sizes.

Nevertheless, the Web site that made its name with books, Amazon.com, continues its long reign as No. 1 in unique visitors, with 20.5 million visitors, up 42% from 14.4 million visitors one year ago, according to Jupiter Media Metrix. Another site, Columbia House, is generating visits, but many are from customers who come to indicate they don't want prescribed selections, Mr. Cassar said. Amazon's rank is likely to be enhanced this holiday season due to the addition of Target.com to its site. Now, if it can just turn a profit.

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