Update: Online Holiday Shopping Picks Up Pace - InformationWeek

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Update: Online Holiday Shopping Picks Up Pace

An uptick in Web shopping came Monday as consumers went back to work and took full advantage of online service tools that require high-speed broadband access.

Consumers becoming more comfortable with the Web are flocking to cyberspace this holiday season looking for bargains instead of braving crowed malls and parking lots. Dell says that on "Black Friday," the day after Thanksgiving, seven out of 10 consumers who bought Dell plasma TVs did so online.

But the real uptick in Web shopping didn't come until Monday as consumers went back to work and took full advantage of online service tools that require high-speed broadband access. It may be an indication of the way consumers will use the Internet in the future to shop, says Carrie Johnson, senior analyst who focuses on the impact of emerging technologies on consumer retailing at Forrester Research.

Online retail sales Monday surged 30% from the previous year to $391 million, Net usage tracker ComScore Networks says. The research firm says consumers spent $6.5 billion online, excluding auctions and travel, between Nov. 1 and Nov. 29, an increase of 25% compared with $5.3 billion during the same days last year.

The spikes in demand on E-commerce sites slowed order processing and could put a damper on online holiday sales. Keynote Systems Inc., a company tracking Internet performance, released data Monday indicating that higher-than-expected demand may overload top online retail sites and sour customers to online shopping. Keynote's E-Commerce Web Transaction Performance Index indicates that reliability on top retail sites is down to 80% from an average 97%. The daily average time to complete a sale on a site has increased to 21 seconds, up from 14 seconds, the research firm said. Keynote began to see this decline as of 7 a.m. PST Monday. The E-commerce index tracks online performance from retailers such as Amazon.com, Best Buy, Costco, Eddie Bauer, J.C. Penney, Office Depot, Office Max, Sears, Target, and Wal-Mart.

Increased traffic can unduly load outbound servers as pages process, says Roopak Patel, senior Internet analyst at Keynote, a Web-performance measurement and management services provider. Other factors include search algorithms that haven't been optimized, insufficient credit-card verification, and look-ups for log-ins and passwords. "Retailers must plan ahead for correct capacity and do load tests under realistic conditions," Patel says. Keynote offers an annual service to monitor a Web site's performance that alerts the company when a page or a portion of its site slows below predetermined standards. The alert comes as an E-mail or an electronic message to a cell phone or a PDA.

Even with overloads, online spending this past holiday weekend didn't disappoint retailers. As expected, retailers saw solid sales, with nearly one in three consumers choosing to do some holiday shopping on the Web, according to the National Retail Federation. The industry group said retailers during the Black Friday weekend rang up $22 billion for in-store and online sales. ComScore Networks weighed in with its weekend estimates.

While Thanksgiving is a comparatively light online shopping day, spending rose dramatically compared with last year. Consumers this year spent $133 million online Thanksgiving Day, an increase of 100% compared with the $67 million spent during the same time in 2003, the research firm said. Americans spent $250 million online on Black Friday, up 41% compared with $178 million in 2003.

Companies and research firms attribute the strong growth to increased broadband penetration and improved retail Web sites. Comparison-shopping tools that give consumers a method to compare prices before they buy also helped. Just in time for Thanksgiving, Comcast and Verizon Communications joined the growing list of comparison-search tool providers such as BizRate, Froogle, NexTag, Shopping.com, and Yahoo Shopping.

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