One Hot Holiday Season

by Rob Spiegel

Don’t you just love the holidays? I did all my out-of-town shopping in one afternoon at Amazon and Barnes and Noble. All that the last minute. I received surprising discounts – way below Wal-Mart prices. I got free or dirt-cheap shipping. And it’s all promised to arrive well before Santa’s busy night. No congestion in the mall. No line at the post office. And I didn’t have to bump up against people carrying the flue. Just me and my computer on a quiet afternoon with Dean Martin singing "The Christmas Blues" in the background. This is too easy. No wonder online holiday sales are up.

And boy are they up. According to the eSpending report from Nielsen/NetRatings, Goldman, Sachs & Co. and Harris Interactive, consumers spent $2.7 billion online for non-travel-related products and services during the week that ended December 5. That’s up 18 percent from the prior week, which isn’t surprising. But the shocker is that online spending is up 85 percent over the $1.46 billion spent during the same week last year.

Not surprisingly, half of all online holiday shoppers completed their purchases via a broadband connection. I use a cable connection, so a great part of my shopping ease was due to the quick product searching that comes from a high speed connection. I was able to click quickly from product to product, comparing prices and features. In years past, the slow dial-up performance made searching and product comparisons frustratingly slow and tedious.

Some of the stated reasons consumers bought online have shifted this year. The leading reason people purchased online was to avoid crowds. This is a chestnut, the top reason for many years. Almost 40 percent wanted to avoid the mall crunch. Another 35 percent were motivated by lower prices online. This reason has gained ground as online retailers offer deep discounts and eat much of the shipping costs. The third reason was the comparison shopping power of the Net. This reason has gained ground with the proliferation of high-speed connections. Comparison shopping is tons easier with broadband.

Two other chestnuts rounded out the list. Online shopping is more convenient than traveling from store to store, and there is a wider selection of products available on the Internet. Shoppers also praised the ease us using the Internet. Forty-two percent said they were "very satisfied" with the 2003 holiday shopping season, a ten-point gain over last year.

Nielsen/NetRatings analysts are bullish on the remaining days of 2003 holiday shopping, since only 31 percent of respondents claim to be finished shopping. "With nearly 70 percent of consumers still shopping, there’s plenty of room for growth and increased spending online," says Abha Bhagat, senior analyst at Nielsen/NetRatings. "Additionally, with Chanukah beginning three weeks later this year as compared with last year and retailers extending shipping deadlines, we’re looking forward to continued growth and a solid overall holiday season."

I’m thinking of shopping online for my kids and in-town friends this year. In the past, I’ve always considered Internet shopping an alternative to mail order catalogs for out-of-town relatives and friends. But why not shop online for in-town giving? The costs are low. The gifts come right to the house and they’re already in boxes. All you have to do is slap on some wrapping paper and slide them under the tree.

Overall holiday sales on the Internet are predicted to reach from $14 to $17 billion this year, up 20 to 40 percent overall according to assorted research companies. At 85% year-over-year, Nielsen/NetRatings shows the highest annual growth in online sales. They may be right. Unlike the other research companies, Nielsen/NetRatings bases its research on actual consumer activity rather than projections. These hefty growth figures come during a year when total holiday sales will grow between 4 and 6 percent. However you look at it, the Internet has really grown up as high-speed connections proliferate. It’s easy. It’s cheap. And you don’t have to stand in line with people who are coughing flu germs into your breathing air.