Online holiday spending rises from the doldrums

Web site monitor says electronic sales helped boost cyber shopping to last year's levels

With a rocky economy and a dismal job outlook, online holiday shopping got off to a slow start this year. Since Dec. 1 though, shoppers appear to have come alive with the holiday spirit, according to data compiled by online reearcher ComScore Inc.

For the first 35 days of the 2008 holiday shopping season, which started on Nov. 1, online buyers in the U.S. spent $14.92 billion - just about the same amount as was spent in the same period last year, ComScore said. The tide appears to have turned in recent days as online shoppers spent $3.74 billion in the first five days in December this year, up 9% over 2007.

ComScore, which monitors the Web sites of 35 major retail companies, had reported last week that online sales on Dec. 1 - also known as Cyber Monday because of the number of people shopping online that day - hit $846 million in the U.S. And Dec. 2 came in strong, as well, with online buyers spending about $823 million that day.

"The online holiday shopping season has picked up noticeably since Thanksgiving as consumers have given in to the holiday spirit -- and very attractive retailer discounts," said ComScore chairman Gian Fulgoni, in a statement. "While this growth is certainly a positive development in this tough retail season, it also needs to be put into perspective. With the compressed time period between Thanksgiving and Christmas this year - five days shorter than last year - we need to see continued strong growth during the critical weeks between today and Christmas if this year's shopping season is to at least match that of last year."

This uptick in spending is good news not just because of the faltering economy but especially in light of multiple site glitches that marred the kick-off of post-Thanksgiving online holiday shopping. Analysts said earlier this month that sales probably would have been even stronger had several companies -- including Sears, Bloomingdale's and Saks Fifth Avenue -- not been hit with Web site breakdowns in the days after Thanksgiving.

For example, Keynote Systems Inc., a San Mateo, Calif.-based Web monitoring company, said was mostly unavailable on the day after Thanksgiving between 10 a.m. and 12:30 p.m. Eastern time, and again between 1:30 p.m. and 5 p.m.

The problems at the retail sites were probably caused, at least partially, by a common oversight on the part of online retailers: load testing just the home page rather than the full online store, according to Shawn White, director of Keynote's external operations, in a previous interview.

Late last month, ComScore had predicted that online spending would be flat this season. However, this week the researcher noted that some product categories are doing very well so far this year. Online sales of sporting and fitness equipment is up by a whopping 35%, while consumer electronics is up 24%, which is good news for PC makers and chip makers, who have been starting to suffer.

Just a few weeks ago, iSuppli Corp. slashed its 2009 growth forecast for PC shipments by nearly two-thirds because of the deteriorating economy. And just before releasing this down forecast, iSuppli had also projected that 2008 semiconductor sales will decline by 2% to $266.6 billion, from about $272 billion in 2007.

Copyright © 2008 IDG Communications, Inc.

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