Holiday online spending zips up as expected

As expected in the weeks before Christmas, online retail sales are up.

In an eSpending study released yesterday by investment bank The Goldman Sachs Group Inc., polling company Harris Interactive Inc. and market research firms Nielsen Media Research and NetRatings Inc., consumer spending online increased by 91 percent, to US$2.6 billion in the first week of December, compared to an average week in November, when sales were about $1.4 billion.

Those numbers, however, can't be directly compared to the same period last year because the methodologies used in the sampling have been changed.

The study showed that the average American spent $91 online during the week ending Dec. 7, an increase of $14 over the prior week. Twenty percent of the 500 online shoppers who were surveyed had made an online purchase that week, an increase from 18 percent the prior week.

The study also reported that 45 percent of the shoppers who were surveyed said they were "very satisfied" with their online buying experiences. Another 14 percent said they were "somewhat satisfied."

The increase in sales from November to December is to be expected, though, said analysts, because shoppers are now under pressure to buy gifts with Christmas looming.

David Taylor, an analyst at Robert Frances Group Inc. in Westport, Conn., said more telling is that consumer satisfaction with online purchases has room to improve.

"That is greater than last year, but it is still not a very high number," Taylor said. "Imagine if a (brick-and-mortar) retailer reported that only 45 percent of customers were satisfied -- top management would be very upset."

Taylor said he views the week-to-week sales increase as a natural event just before Christmas, and not as an indicator that all is well with the economy or with online sales. The low satisfaction levels should be a bigger concern, he said.

"It's just the pre-Christmas rush kicking in," he said. "I think they've got the wrong emphasis."

Gene Alvarez, an analyst at Meta Group Inc. in Pleasanton, Calif., said the sales increase numbers are almost meaningless because they can't be compared to past years to get an accurate portrayal of how online shopping trends are developing. "Why should online retailing have its own set of metrics?" he asked.

The rise in sales online from November to December isn't a shock, Alvarez said. "It's seasonal."

Last weekend is what Alvarez calls "brick-and-mortar weekend," when customers shift their shopping from online to off-line because of worries they won't be able to get their packages quickly enough with Christmas right around the corner. "There's a drop-off that will occur probably midweek this week in terms of online spending," he said.

Lisa Strand, director and chief e-commerce analyst at Milpitas, Calif.-based NetRatings, said the survey numbers also indicated that many shoppers spent November comparison shopping online, getting detailed information before finally making their purchases in the first week of December. "Now they're not necessarily afraid to go ahead and buy those gifts," she said. "People were just waiting a little bit longer to make their purchases."

Lori Iventosch-James, director of e-commerce research at Harris Interactive, said that only about 2 percent of the 500 shoppers surveyed indicated that the terrorism of Sept. 11 caused them to shop online to avoid malls and public places due to terrorism fears.

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