Online sales to be darling of holiday season

Posted Nov 28th 2009 5:10PM by Tom Johansmeyer
Filed under: eBay (EBAY), Amazon.com (AMZN), Best Buy (BBY)

Online retail sales are expected to increase 3% to $28.8 billion for this year's holiday season. The analysts at comScore include traditional retailers, like Macy's (M) in this estimate, but don't count auction sites like eBay (EBAY), travel or corporate sales. The estimate compares favorably against the National Retail Federation's forecast of a 1% year-over-year drop for all retail sales and exceeds the industry's most aggressive holiday season sales estimates of 2%.

Last year, online retail sales fell 3% for the holiday season, the first decline since the industry started keeping score in 2001. Even if we don't hit the 3% growth level this year, 2009 is still expected to be better than 2008, now that the economy has stabilized (at least relative to last year).

According to Forrester Research, online accounts for 7% of all retail sales ... because it's easier. Consumers can save time, beat the crowds and comparison shop more easily (and without having to drive to several places).

And, the savings possible are profound.

Even though it isn't included in the comScore estimate, eBay does attract shoppers, particularly because they can either buy direct or participate in an auction for an item that might be out of date or slightly used -- and would be unattainable otherwise. Auction sites can also attract customers who want items that are harder to find in stores, even if they have to pay a ~~little~~ lot extra.

To kickstart online sales, some retailers are pursuing social media marketing strategies, with companies like Toys R Us and Best Buy (BBY) turning to Twitter and Facebook to get in front of potential customers and lure them to their sites. But, the top online player continues to be Amazon (AMZN), which has used its Kindle to trigger plenty of excitement (and buying). Last year, Amazon had its "best ever" holiday shopping season, with revenue up in the fourth quarter of 2008 to $6.7 billion. Strong recession management skills make the online retailer a force this year, as well.

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