Wall St. Journal: As Stores Sputter, Sales Sizzle Online
As Stores Sputter, Sales Sizzle Online Dec. 15 Sets Record for Web-Site Revenue; Sears, Macy's,Other Big Retailers Lure Internet Shoppers By GEOFFREY A. FOWLER
A holiday season of Web price wars and aggressive online promotions by store-based retailers is leaving e-commerce a larger force in American retail.
While sales conducted at brick-and mortar stores are about flat this season compared with 2008, online retailing grew 4% from the beginning of November through Dec. 18 to $24.8 billion, according to Web tracking company comScore Inc. Online sales on Dec. 15 totaled $913 million, marking a one-day record for the industry.
Most online holiday sales began winding down Friday with the expiration of deadlines to receive free shipping. But Web analytics company Coremetrics Inc. reported that sales Friday and Saturday broke expectations to increase 24% compared to the Friday and Saturday before Christmas last year, as snowstorms in the eastern U.S. prompted some consumers to do last-minute shopping online.
While e-commerce accounted for 6% of all U.S. retail sales excluding cars, travel and prescription drugs in 2008, it could end the holiday season this year representing about 7%, said Sucharita Mulpuru, an analyst at Forrester Research.
"Price and convenience are probably the biggest factors—you can often save money shopping online," she said. Online sales just over the holidays likely will reach 10% of all retail, she added.
The lion's share of the online growth went to larger retailers that were in a better position to offer deep discounts and lures such as free shipping. Out of the top 500 retail sites, the percentage of visits to the top 20 such sites rose 9% over the past five weeks, versus the same period last year, according to Experian PLC's Hitwise Web-tracking service. The percentage of visits to the rest—including sites such as Petco.com and Hallmark.com—fell 9%.
Amazon.com Inc. appeared to be the biggest winner, at least in terms of site traffic. Its share of traffic among the top 500 retailers rose nearly 31% to more than 16% in the week ended Dec. 12. That's more than double its nearest competitor, Wal-Mart Stores Inc., which launched aggressive price wars with Amazon on books, video games and other products.
Amazon, which declined to divulge sales statistics, has said only that December marked the best month ever for sales of its Kindle e-reader.
Sears.com, owned by Sears Holdings Corp., leapt from No. 6 last year to No. 4 this year on Hitwise's traffic rankings, thanks to an 11% pickup in share during the week ended Dec. 12. Sears has been promoting a service that lets online shoppers pick up their purchases in its stores and created an online community called MySears.
"Everybody raised their game," said Fiona Dias, executive vice president for marketing and strategy at GSI Commerce Inc., which runs about 100 retail Web sites. "People are going to have to be much more creative in a world where the big guys are consolidating."
To compete with the mega-sales from the largest retailers, this year GSI encouraged about 30 online merchants to band together and email each others' best customers for a "world's greatest friends and family event" last Sunday and Monday.
Yet some of the sales growth came at the expense of profit. MyBuys Inc., which tracks sales by individuals at dozens of client sites to provide product recommendations, said that for the month of December through the 17th, the average discount on promoted items rose 5.6% to total 26.4%, compared to last year.
Large retailers got the biggest boost from discounting, with sales from such promotions leaping 213% among the top quarter of retailers by size that MyBuys tracks.
Some smaller online retailers say they are having a harder time standing out. Vanessa Barcus, the owner of the designer-clothes site Shopgoldyn.com, said she can't compete with the holiday marketing budgets of large sites and has tried to rein in discounting as the economy picks back up.
"No one wins—big or small—when we all cut down our margins so much," Ms. Barcus said. Still, her holiday sales so far are up 37% compared to last year's, and selling online has become more important than sales in her Denver showroom.
EBay Inc.'s giant online marketplace, where traffic has slumped in recent years, lost shoppers every week since the end of November compared to the same period of last year, according to Compete Inc.
EBay, which has cut back on coupons this year to instead focus on a multimedia marketing campaign and cross-country mobile shopping display, declined to comment.
But some of the largest merchants on eBay.com reported a pickup, especially last week. ChannelAdvisor Corp., which helps brands sell on a variety of online destinations, said its comparable-store sales on eBay were up 4% from Dec. 1 to Dec. 15. Including merchants that were new to eBay this year, sales were up 20% year over year, the company said.
Yet comparable-store sales among ChannelAdvisor clients on Amazon's marketplace were up 74%.
"Clearly, Amazon continues to do very very well and is taking share from everyone in the ecommerce world," said ChannelAdvisor's chief executive, Scot Wingo.