Online holiday sales higher than expected

Based on early reports from online retailers, it appears that 2002 online holiday retail sales (covering the period of November 1st to December 31st) will exceed its original forecast of $13.1 billion, which would represent growth of more than 17% over the 2001 holiday period, according to preliminary data released by Jupiter Research, a division of Jupitermedia Corp., Darien, Conn.

While the growth in online sales is significant, online sales accounts for a relatively small percentage of overall sales. In fine jewelry, for example, JCK estimates that about 2.3% of total holiday jewelry sales were made online in November.

“Widespread free shipping promotions are the primary reason that the 2002 holiday season was such a good one,” says Ken Cassar, Senior Analyst with Jupiter Research. However, Cassar warns, “Online retailers may have created the expectation among consumers that free shipping and handling is now the norm, which puts a lot of pressure on retailers to run free shipping promotions into perpetuity.”

Jupiter Research expects to release final 2002 holiday sales figures in March pending release of actual sales results from retailers and results of a post-holiday consumer survey.

Jupiter Research advises that rather than fighting consumers on this issue, retailers should focus on improving operational efficiencies in their warehouses and exploring cost effective means of delivering goods. According to Jupiter Research’s Cassar, “Retailers that do not have to match the prices in their own brick and mortar stores should consider gradually and subtly raising prices online to cover lost shipping and handling revenue.”

Online retailers did a commendable job of keeping their sites up and running despite the fact that peak day sales volume was for many retailers more than 50 percent above last year, according to Cassar. “Retailers’ Web sites and fulfillment infrastructure, by and large, bore the weight of the concentrated sales volume from a short holiday selling season,” he said. “What makes this performance particularly impressive is that few retailers had made substantial infrastructure upgrades prior to the 2002 holiday shopping season.”

Jupitermedia Corp., is a provider of global real-time news, information, research and media resources for information technology and Internet industry professionals.