To Online Sellers, Santa Is Still in a Giving Mood
Online shopping during the holiday season more than tripled over last year, according to estimates issued Monday, and Internet retailers reported that traffic has remained extremely heavy in the days after Christmas.
Boston Consulting Group said online holiday shopping grew by 230% this year, with the size of the average order rising to $55, a gain of 6% over the same period in 1997.
Few retailers have released hard figures on the season. However, those that have continued to be rewarded by investors who seemingly can’t get enough of Internet companies.
SkyMall Inc. on Monday reported that its Internet sales this year will be up 600% from last year, from a paltry $300,000 to $2.1 million. Its stock nearly tripled on the day, to $35.56 a share.
Similarly, when Sharper Image Corp. said last week that its online sales outpaced both its mail-order and store businesses, its stock jumped 18% in one day.
Some analysts, although enthusiastic about the Internet’s potential for retailing, said the stock market’s response has been unrealistic.
“Because of the nascency of the business, it would be very reasonable to expect some huge percentage increases compared to last year,” said Jae Kim, electronic commerce analyst at Paul Kagan Associates in Carmel. “The perception has really run away and overshadowed the reality in this market.”
Online retailers have seen their stocks soar in recent months, with Amazon.com leading the way. On Monday, the online book retailer hit an all-time high of $351.94, 67% above its pre-Thanksgiving Day close.
The stocks of online merchants EBay Inc., Onsale Inc., CDNow Inc. and N2K Inc. have all seen all-time highs since Thanksgiving. The stock price of UBid Inc., an online auction site, has more than tripled from the opening price of its initial public offering earlier this month.
Even troubled Corona del Mar-based Shopping.com, which is desperately in need of a capital infusion, said it had a merry Christmas in terms of retail sales.
“We had an extremely busy season, and it exceeded our expectations,” said Frank Denny, the company’s chief executive, echoing the sentiment of other online retailers. “We’re very busy this week too. You can’t tell the difference between this week and the previous week.” Shopping.com’s stock closed at $13.56, down 25 cents, on Monday.
If anything, the surge in online shopping caught Internet retailers by surprise, at some periods overloading the computers at Barnesandnoble.com and EBay and outstripping some retailers’ supplies.
Electronics retailer 800.com Inc. ran a 3-for-a-dollar promotion for videos and music earlier this month and then had to e-mail customers saying it would not be able to fulfill all the orders for some time.
Books, music and videos continued to sell well online. But some retailers also saw a surge in items such as small electronics and home appliances.
Top-selling categories at Shopping.com included housewares, sporting goods and home improvement items as well as books, music, and videos, Denny said.
But online sales were still skewed somewhat toward the technophile, with electronics leading the way, although categories such as toys and apparel did find many more buyers than before.
Online movie retailer Reel.com, for example, said it saw particularly strong sales of DVDs, the new home-movie format.
“We had a good holiday, and we’re actually having a post-Christmas rush too,” said Julie Wainwright, Reel.com chief executive. She attributed the DVD sales strength to technologically savvy people who got DVD players for Christmas and would be more likely to buy products online. “Today, we’re having a phenomenal day.”
In August, the new format made up a tenth of Reel.com’s sales; in December, it’s made up more than a third, and DVDs are continuing to sell well after Christmas.
Those online retailers that have reported sales figures have done so in terms of percentage increases over Internet sales from the previous year, which were relatively minuscule.
Online auction house Auction Universe Inc., which competes with EBay in person-to-person auctions, said it has gotten busier after Christmas, presumably as people try to unload unwanted gifts or try to pick up post-holiday bargains.
“The first quarter of next year is going to be even bigger than the fourth quarter of this year,” said Larry Schwartz, chief executive of Auction Universe, which has seen the number of new membership registrations each day jump more than 30% since Christmas. “People came to the site before the holidays to buy Beanie Babies and computers, and after the holidays it’s a great place to resell them.”
Auction Universe is a division of Classified Ventures, which is owned in part by Times Mirror Co., the parent company of the Los Angeles Times.
Some in the industry see a bubble about to burst in the near future, particularly in categories such as books, music and video.
‘ “The question is how quickly it will come,” said Wainwright, who believes it could be six to 18 months away.
“The Internet right now isn’t big enough to support all these different stores selling the same products. It takes a lot of money to get your brand out and provide great customer service.”
