Start the conversation
E-commerce sales on "Cyber Monday" – the first Monday following the Thanksgiving holiday – climbed to record levels this year, but that success doesn't necessarily mean the holidays will bring more cheer to retailers.
Virtually every retailer with an online presence dressed up its website with special offerings, and many of the bigger ones – RadioShack Corp. (NYSE: RSH), Best Buy Co. (NYSE: BBY) and Target Corp. (NYSE: TGT) – sent out targeted e-mails offering their best customers discounts of up to 40% on Internet purchases. The tactics worked, as an estimated 96.5 million Americans went online Monday to buy everything from toys, books and music CDs to high-end fashions, jewelry and flat-screen TVs.
According to Coremetrics Inc., a California-based marketing company that tracks shopper behavior on more than 500 websites, Monday's Internet sales in the U.S. rose 13.7% from 2008, well above predicted increases of as little as 5%. Although final dollar figures weren't yet available, best estimates put the total at about $961 million, up from $846 million in 2008 and $733 million in 2007. Coremetrics said per-shopper numbers also rose, with each order this year averaging 5.92 items (versus 4.56 in 2008) and an average order value of $180.03 (up from $130.24 in 2008).
Though electronics led in total sales, clothing and jewelry retailers reported the largest increase in average dollars spent per shopper, up 26.4% and 14.3%, respectively. As an indicator of the rising popularity of online shopping, sporting goods retailers reported a 55% rise in the number of new Web site visitors, while the department stores – including Macy's Inc. (NYSE: M) and J.C. Penney Company Inc. (NYSE: JCP) – averaged a 33% increase in new visitors to its Web sites, though its average order volume actually fell 10%.
Across all retail sectors, the number of new Web site visitors who went on to make purchases was estimated at 4.28%, compared to a 2.91% jump in 2008.
The online numbers also showed significantly improved strength relative to those from Black Friday, the day after Thanksgiving. The National Retail Federation (NRF) said that roughly 195 million consumers shopped in stores and online that day, up from 172 million last year – but the average spending per person dropped from $372.57 in 2008 to just $343.21 this year. Shoppers focused more on lower-priced items than in years past, and that carried over somewhat to Cyber Monday, where the reported sales gains were concentrated on heavily discounted items, with very little volume in regular-priced merchandise.
That could bode ill for the remainder of the holiday shopping season, especially since a telephone survey conducted by Rasmussen Reports LLC found that 7% of Americans had finished their shopping by the end of Black Friday, while another 41% are partially done.
Other negative factors include the rising cost of making credit-card purchases. Only 25% of those surveyed by Rasmussen said they intended to pay for holiday purchase with credit cards – a major hurdle for online retailers, most of whom rely on credit-card sales or online payment services like eBay Inc.'s (Nasdaq: EBAY) PayPal unit.
Although the NRF was obviously pleased by Monday's better-than-expected e-commerce results, the numbers weren't good enough to inspire the organization to revise its estimate for the entire season – which earlier predicted a 1% decline in overall holiday sales. The lack of an upward adjustment could be due to the fact that, even with the gains, marketing analyst Forrester Research, Inc. says cyber orders will still account for just 6% or so of total holiday sales.
Another reason for some of the continued gloom is that the numbers do nothing to help – and may even hurt – the thousands of small mom-and-pop retail stores, boutiques and specialty shops around the country that don't have an online presence.
Many of those businesses are hanging on by a thread, hoping holiday sales will rescue them from the ongoing weakness in the economy – and they won't benefit at all from those people who do their shopping with their fingers rather than their feet.
News and Related Links:
- Money Morning:
Bargain Hunters Turn Out for Black Friday
- Rasmussen Reports:
7% Already Have Finished Their Holiday Shopping