RAPAPORT... Online holiday sales in 2006 accounted for $24.6 billion, up 26 percent from 2005, according to comScore, the only online analyst to officially release year-end Christmas spending reports by press time. “What that says is we’re not seeing any slowing in the rate of growth,” says Andrew Lipsman, comScore senior analyst. “The [online] market is not yet mature.”
ComScore’s 2006 numbers in nontravel retail spending, excluding auctions and large corporate purchases, totaled $102.1 billion, which represents a 24 percent increase, year-on-year, from 2005. In its January 3 press release, Gian Fulgoni, chairman of comScore Networks, said, “2006 was certainly an exceptional year for online retailers as ecommerce spending eclipsed $100 billion for the first time…. The online holiday shopping season of course played a vital role in the year’s success, as spending accelerated during the final two months of the year, helping push total online retail spending over the $100 billion threshold.”
The final figures were consistent with seasonal percentage increases that comScore Networks released in mid-December. At that time, the company said that online retail sales at U.S. sites reached $12.42 billion from November 1 through December 3, an increase of 25 percent versus the same period in 2005. “This gain is being driven by a 17 percent increase in the number of online buyers, coupled with a 7 percent increase in the average dollars spent per buyer,” the company said in a press release.
ComScore’s year-end numbers were consistent with optimistic online sales forecasts issued earlier by Forrester Research. In a report released in October 2006, “U.S. eCommerce Outlook For Q4 2006,” Forrester predicted strong sales for the season, noting that “Although consumers appear to be pessimistic about their online retail holiday spend, Q4 should finish strong, with holiday sales reaching $27 billion.”
ONE SURPRISEShop.org’s initial predictions of exceptionally early holiday shoppers, based on the 2005 season, ended up falling flat. In fact, ComScore labeled 2006 “the year of the procrastinator.” Its January 3 press release says: “The flow of online holiday retail spending in 2006, as compared to the previous year, demonstrated that online consumers pushed their buying later than ever. Spending growth during the first third of the season rose a modest 23 percent above 2005 levels, despite the week before Thanksgiving, which saw robust 30 percent growth versus the corresponding week in 2005. The middle third of the season, during which the greatest share of holiday ecommerce spending occurred, was consistent with the 26 percent growth demonstrated during the course of the season as a whole. The final three weeks of the holiday season saw a major surge in spending as the procrastinators came out in full force, driving a 31 percent increase versus the corresponding weeks in 2005. The week leading up to Christmas saw the biggest surge, with a 45 percent increase versus the corresponding week a year ago, as consumers showed their faith in online retailers’ ability to ‘deliver the goods’ in time for Christmas.”
This abundance of late shoppers conflicted with Shop.org’s “Best Practices and Tips for a Successful Holiday in 2006,” which Shop.org based on findings from the Shop.org eHoliday Mood Study produced in partnership with BizRate Research. In that report, Shop.org said that Wave Four data collected January 9 to 10, 2006, confirmed that one-third of consumers surveyed started shopping online earlier than last year; up six percentage points from 2004.
BIG-DOLLAR DAYSIn addition to strong sales overall, comScore’s January press release noted that there were several very-high-income individual days. Not only were there more high-spending days in 2006 than in 2005, but the actual amounts spent on those days were higher. According to comScore, “Online retail spending saw several strong individual spending days during 2006, with 12 days during the November/December holiday season surpassing the $600 million mark.” In comparison, just six days in 2005 reached $500 million in online sales, with Monday, December 12, 2005, registering $556 million. Wednesday, December 13, marked the heaviest online spending day of 2006 with sales of $667 million, followed by Monday, December 11, with $661 million, and Monday, December 4, $648 million. Monday, November 27, named Cyber Monday because it’s considered the biggest online shopping day, was surpassed 11 times during the subsequent weeks of the holiday season.
JEWELRY AND WATCHES AMONG THE TOP CATEGORY LEADERSOf particular interest are the category leaders for the season. While comScore’s top three category leaders by average order value — computer hardware, $292; consumer electronics, $153 and video game consoles and accessories, $141 — may come as no surprise, the fourth-highest numbers were in the jewelry and watch category, which saw an average order value of $128. “The jewelry category was one of the top growers,” says comScore’s Lipsman, who saw the average order value as indication of “a definite willingness to purchase higher-ticket items.”
Apparently, it’s the higher-ticket purchases that are helping to drive the online market’s growth forward. “That most of the higher-ticket categories also appeared on the list of fastest-growing retail categories confirms that they were significant growth-drivers” for the 2006 holiday season, says comScore in its report. “Specifically, online spending on jewelry and watches has grown 69 percent, while event tickets is up 66 percent, video game consoles and accessories rose by 51 percent, and consumer electronics by 37 percent.” Compared to an overall growth of 26 percent, says Lipsman, these numbers are particularly worth noting, and indicate successful promotional pushes by jewelry and watch retailers.
Article from the Rapaport Magazine - February 2007. To subscribe click here.