Online Holiday Sales Increase

Holiday Online Sales Jump 15 Percent

by Doug Desjardins

As expected, online retailers generated a double-digit increase in sales for the holiday season, led by a strong Cyber Monday.

According to the MasterCard Spending Pulse report, online sales increased 15.4 percent from Oct. 31 through Dec. 24 compared to the same period in 2009. The report estimates consumers spent $36 billion on purchases.

“Today, e-commerce accounts for a much larger share of overall retail sales than it did a few years ago and during this holiday season, it registered double-digit growth for six out of seven weeks,” said Michael McNamara, vice president of MasterCard Advisors Spending Pulse.

Online holiday sales topped $1 billion for six individual days during the shopping season. The biggest sales day was Nov. 30, the day after Cyber Monday, with $1.16 billion in sales. The following day was almost as good, with total online sales of $1.13 billion for Dec. 1. On Cyber Monday, sales generated $993 million, a 25.3 percent increase over 2009.

Sales were led by strong showings in consumer electronics and apparel. The latter category was a surprise, since apparel delivered poor results in 2008 and 2009.

“This is the season of the sweater,” said McNamara. “What is driving this is that apparel sales online are doing well in general, represented by a shift from brick-and-mortar stores. The weather has helped too.”

The week before Christmas, the West Coast was inundated by a massive five-day storm that dumped more than a foot of rain in some places and kept people indoors. Then the day after Christmas, the Northeast was hit with a blizzard that dumped up to two feet of snow, stranded millions of travelers and hurt post-Christmas sales in stores, something that should benefit online retailers.

“It’s like throwing a party and nobody comes because the focus has gone from post-holiday shopping to post-holiday travel,” said NPD Group chief industry analyst Marshall Cohen. “Look for sales to be repeated by retailers. They’re going to be more aggressive. They’ve got to throw another party.” The day after Christmas is typically one of the five busiest shopping days of the year.

Online sales are expected to benefit from the blizzard, with consumers stuck inside spending their money online instead of in stores. During the 2009 holiday season, online sales jumped 15% in the days following a pre-Christmas storm. Craig Johnson, president of consulting firm Customer Growth Partners, said he expects online retailers to get “a slight bump” in sales from the snowstorm.

While most research firms were wrong in their forecasts for brick-and-mortar holiday sales - with the 5-percent increase nearly double what most were expecting - they were spot on with their online sales projections. Back in September, research firm Deloitte projected a 15-percent jump in online holiday sales while eMarketer predicted a 14.3-percent increase.

Resources

Online Holiday Shopping Jumps 15 Percent in 2010

U.S. Retailers Hurt as Snowstorm Thwarts Shoppers

December 2010: Online Holiday Sales Forecast: Optimism in the Air