Jolly Online Shoppers Making Cash Registers Jingle

Online holiday shoppers this year are making cash registers jingle and meeting analysts' expectations as they spent $8.8 billion in November.
Online holiday shoppers this year are making cash registers jingle and meeting analysts' expectations as they spent $8.8 billion in November, researchers said Monday.

More than a quarter of the money tossed into retailers' pockets through the Internet last month were for clothing, toys and video games, with the latter including hardware and software, according to the latest joint eSpending Report from Goldman Sachs & Co., Harris Interactive and Nielsen/NetRatings.

"Everything was fairly in line with what was expected," Heather Dougherty, retail analyst for Nielsen/NetRatings, said.

Based on last month's spending, consumers were on track to spend the more than $15 billion projected for the November-December holiday season by ComScore Networks, a Reston, Va., company that tracks web-site activity.

"(The season) has definitely had a strong start, and not everyone has even started, or completed, their holiday shopping," Dougherty said.

In November, shoppers spent 19 percent more than the $7.4 billion retailers collected online in November 2003. The growth rate, however, has slowed. The 2003 number was 34.5 percent higher than the $5.5 billion spent in 2002.

The slowdown is expected, given the fact that most U.S. households that want Internet access have it today.

"The Internet population hasn't grown over the last 12 months," Dougherty said.

While online shopping is increasing, it's not expected to have any impact on total retail sales. That's because people are not spending more, but are choosing the convenience of the Internet over shopping in stores.

Overall, Internet shopping makes up a very small percentage of total retail sales. For example, third quarter sales reached $916.5 billion, with online revenues accounting for less than 2 percent of the total, according to the Commerce Department.

Nevertheless, retailers are happy to get consumer dollars anyway they can and are encouraging shoppers to head online with free shipping promotions and special sales, Dougherty said. Because people spend more in stores, retailers have also made it easy for customers to buy online and then come into the store to pickup or return gifts.

In addition, the No. 1 use of the Internet is for comparison-shopping, so put it all together, and more people than ever are using the web and brick-and-mortar stores together to make purchases, Dougherty said.

In terms of products, online shoppers spent nearly $1.5 billion on clothing in November and slightly more than $1 billion on toys and video games. The remaining top five products were videos and DVDs, $882 million; books, $621 million; and music, $481 million.

While people use to be apprehensive about buying clothes online, easy return policies at local stores has gone a lot ways toward lessening that concern.

"(Retailers) have made returns a much more seamless transaction, so they've really mitigated that factor," Dougherty said.

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