Online Spending Sets Record In 2004

Consumers spent a record $117 billion online last year, with many of them preferring to shop with retailers that had Internet and brick-and-mortar stores, a market research firm said Monday.

Overall, online consumer retail spending grew by 26 percent over the $93.2 billion spent in 2003, ComScore Networks said. During the holiday shopping season alone, which includes November and December, consumers spent $23.6 billion, a 28 percent increase over the $18.3 billion spent the previous year.

ComScore found that 25 multi-channel retailers, or those that conduct sales online and offline, posted an aggregate year-over-year growth rate that was about twice that of online retail in total.

"While it's clear that a broad range of online merchants saw a strong season, multi-channel retailers were standouts this year," Dan Hess, senior vice president of industry analysis at ComScore, said in a statement. "Many of the nation's leading retail brands flexed their muscle this season, with strategies including faster delivery options, significant site redesigns and effective cross-channel promotions."

Six of the top 15 traffic- gaining retail properties over the holiday season were the online storefronts of traditional offline department stores, such as Home Depot, Neiman Marcus and Wal-Mart.

Blockbuster's launch of a DVD delivery service boosted online traffic nearly fourfold since 2003, ComScore said. Cellular phone and service related sites LetsTalk.com, AttWireless.com and T-Mobile.com each posted traffic gains of more than 80 percent over 2003, as consumers searched for new cell phones and rate plans, and also increased cross-shopping because of the introduction of wireless number portability at the end of 2003.

Throughout 2004, ComScore saw sales increase in a broader number of categories, such as home and garden, flowers, gifts and greetings, apparel and accessories and jewelry and watches, than in 2003.

During the holiday season, shoppers went online later than ever to order gifts, spending 57 percent and 53 percent more than in 2003 during the weeks ending December 19 and 26, respectively.

The late surge in spending was attributed to retailers allowing customers to buy online and pickup their gifts at stores, later shipping deadlines, the growing popularity of gift cards, offline product shortages, and increased broadband access from homes.

Despite the big jumps in online spending, however, Internet sales still make up a small portion of the overall retail market, analysts say