E-tailers Enjoyed A Fruitful Holiday Shopping Season

New York— Drawn by a slew of free shipping promotions and improved fulfillment and site functionality, consumers flocked to cyber stores in record numbers to do their holiday shopping last year. And consumer electronics was once again among the top categories they sought.

Indications of an Internet Christmas came early. According to BizRate.com, online sales spiked 61 percent on the day after Thanksgiving compared to the prior-year Black Friday, to $234.2 million. Top growth categories included computer hardware and electronics, while digital cameras, PDAs, printers, camcorders, and DVD players and VCRs were among the most searched for products.

Given e-tail's shorter holiday selling season, cyber sales peaked on Dec. 9, when online spending reached $367 million for the day, BizRate said. For the total holiday period of Nov. 1 through Dec. 9, year-over-year sales grew 43 percent to $8.37 billion from $5.86 billion, the company reported.

CE also figured prominently in an e-commerce analysis from Goldman, Sachs & Co., Harris Interactive and Nielsen/ NetRatings. According to their eSpending Report, consumer electronics was the fourth largest category shopped online between Nov. 2 and Dec. 13, claiming 11.6 percent of total market share with $1.2 billion in sales — a 47 percent leap over the prior-year period. (see chart).

Why the surge in cyber shopping? Low prices was the leading reason initially cited by consumers in the eSpending Report, although that was succeeded by avoiding crowds and traffic as Christmas drew closer.

Other factors influencing the flood of e-commerce sales were an improved shopping experience and free shipping. According to the 2002 Online Holiday Mood Study, a joint effort by BizRate and the National Retail Federation's online arm, Shop.org, 85 percent of cyber shoppers were very or somewhat satisfied with their buying experience.

Conversely, 47 percent of e-tailers said that the time it took to fulfill a customer's order had significantly or slightly improved compared to last year. What's more, 60 percent of e-tailers cited free shipping with conditions as their most successful promotion for driving business. Said Silverman, "Free shipping with conditions has turned out to be the defining characteristic of the 2002 online holiday season. This is not surprising considering that the majority of online buyers said that shipping costs prevent them from buying more online."

But despite the successful season, online sales are still only 2 percent of total retail revenue, reminded MIT professor Christian S.M. Dussart, who expects cyber share to rise to 5 percent by 2005 and to 20 percent by 2015. "It's a long term phenomenon," he said.