Hot: Online window shopping

Perks such as free shipping and in-store pickup of goods purchased online have helped draw people to the Internet, according to the report issued Thursday. Electronics retailer Circuit City said its in-store pickup option is more popular than ever, with nearly half its online customers walking into a store to pick up their merchandise.

Although online sales are up overall from last year at this time, the rate of growth is leveling off. Online holiday retail and travel sales will reach $11.9 billion this season, up 11 percent from last year, the report said. But in 2000 it was up 54 percent from the year before, and up 125 percent in 1999. The Jupiter estimate for this year is in line with figures from Nielsen/NetRatings, indicating a 10 percent increase in online sales last month.

The overall economic malaise is also playing a role in a general downturn in spending.

"I shopped online last year, probably more than this year," said Tarik Ono of San Francisco, who said she frequently shops on Amazon.com. "I'm buying less presents this year."

Consumer concern over returning gifts, an American holiday ritual, may be one hurdle facing some online retailers, according to the report. Forty-one percent of online shoppers cited difficulty with returning products as a reason they are reluctant to buy online. Plus, many retailers are offering better deals offline this year, and there are fewer deep holiday discounts than in years past.

Aryeh Sheinbein in New York is buying more gifts this year at the online outlets of traditional retailers such as Old Navy, Gap and Eddie Bauer, rather than at online-only stores. "It adds an element of convenience for sure; you can go back to the store if there's a problem."

The shopping rush, which traditionally kicks off the Friday after Thanksgiving, is nearing a close. One of the biggest online retailers, Amazon.com, warned customers that Friday is the last day that goods sent by standard shipping will arrive in time for Christmas, and that after that there will be extra charges to get goods delivered by Dec. 25.

Going into the holiday season, many retailers warned they might be hurt by both the tepid economy and the Sept. 11 attacks. Research firms were more optimistic. In line with Jupiter's estimates Thursday, Gartner researchers had predicted $11.86 billion in sales in North America this holiday season and more than $25 billion worldwide.

Last year, e-commerce holiday sales hit $9.1 billion, according to several research firms.