Wednesday, October 22, 2008

Online Holiday Sales Forecast

OCTOBER 22, 2008

Jeffrey Grau, Senior Analyst

This year online holiday sales (excluding travel) will total $32.1 billion, up 10.1% over 2007. This is a sharp decline from growth rates in the low-to-mid 20% range seen over the past few years.

The weak economy is placing downward pressure on e-commerce sales this season. That pressure accentuates the already declining sales growth, which is a sign of the inevitable maturation of the online shopping channel.

Financially strapped consumers will use a variety of strategies to save money on holiday gifts. More than ever, they will turn to the Internet to get gift ideas, find bargains and locate retailers that stock desired products. Shoppers will shift a larger share of their purchases from stores to the Internet to save gas money and avail themselves of retailers’ free shipping offers.

The main engine of e-commerce growth is incumbent online buyers who are shifting a greater percentage of their total spending from stores to the Internet.

The spending shift from stores to Websites is expected to continue this holiday season, according to a recent survey sponsored by ATG and conducted by the e-tailing group. This year 49% of holiday gift spending among US Internet users will occur online, compared with 44% in stores—making this the first time the Web has surpassed the store as the preferred channel for Internet users to purchase holiday gifts.

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