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Holiday Forecast: Continued Growth Of Online Sales

By Leslie Walker
The Washington post
Thursday, November 11, 2004; Page E01

When I ordered Christmas presents last week from L.L. Bean's 295-page holiday catalog, I broke my usual routine and did not call the company's toll-free line. Instead I visited the Web site because I thought it might offer bargains and be as quick as a phone call.

No bargains grabbed me, but placing the order online did prove nearly as painless as a phone purchase -- partly because after I typed in the catalog item numbers, LLBean.com brought them right up and asked if I'd prefer to check out without registering. I jumped at the chance not to create another goofy password and user name; my real name and credit card number worked fine.

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The "guest checkout" option was a nice nod to the increasing number of shoppers like me who are blending the Web into their offline shopping habits -- but who will switch in a heartbeat to close the sale elsewhere if hassles pop up. Already, roughly a third of folks who shop from catalogs prefer placing their orders online than by phone, and that will jump to 50 percent by the end of next year, according to Abacus, the research division of the online advertising and marketing firm Doubleclick Inc.

Analysts say a continued blurring of the lines between online, catalog and in-store shopping will be a big undercurrent of holiday shopping this year, as Web-based commerce turns 10 years old and takes a breather from the heady growth of its youth. The bonanza of online discounts and generous giveaways that were holiday staples in the past are being replaced by measured promotions, including some designed to drive people back into stores.

Historians offer various dates for the birth of electronic commerce, since people were trying to sell stuff over many routes to the Internet in the late 1980s. But 1994 was the year Web commerce grabbed worldwide attention after new technologies allowed secure transmission of credit card data online. The Internet Shopping Network debuted that January, a start-up called Netmarket sold its first CD on the Web in August, and major banks raced to experiment with Web-based payment forms. Amazon.com and eBay launched the following year, triggering a stampede of copycats.

A decade later, online sales growth is slowing but still outpacing overall retail. Total Internet sales in 2004 are expected to jump by more than 20 percent over last year, claiming roughly 6 or 7 percent of all retail in the United States, according to analysts. Regular retail sales are projected to grow closer to 5 percent. For both, the year-end holidays are crucial.

The latest Internet holiday sales forecast, released yesterday by ComScore Networks Inc., calls for consumers to spend more than $15 billion online in November and December, a jump of 23 percent to 26 percent over last year. Two other firms, JupiterResearch and Forrester Research, are forecasting Internet holiday sales to grow by 19 to 20 percent. A more bullish prediction of 29 percent growth comes from the online research firm eMarketer.

Last year, online holiday sales rose by 30 percent, ComScore reported, which means most analysts are predicting a slowdown this year -- in part because fewer new shoppers are coming online and also because of softness in the economy.

"There is a lot more uncertainty this year," said JupiterResearch analyst Patti Freeman Evans.

It remains to be seen how retailers will respond. Most have already decked out their Web sites for the holidays, and it appears that there are not as many "free shipping" and "on sale" signs. Gift site RedEnvelope is displaying a "Shop early and we'll hold your gifts until Christmas" sign in the middle of its home page. Walmart.com is pushing personalized holiday stockings. On its front page, CircuitCity.com is touting "Holiday deals and 5-hour specials." The daily specials are fairly limited, though, and typically amount to 10 to 15 percent price drops.

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