U.S. e-tailers witnessing <BR> holiday bonanza

Holiday shoppers are staying home in record numbers. At Yahoo!

Holiday shoppers are staying home in record numbers. At Yahoo!, transactions are up 400 percent over last year.

By Margaret Kane, ZDNet News
November 29, 1999 6:21 AM PT

The first early indicators for the holiday shopping season are in, and things are looking good for online retailers.

Yahoo! Inc. said Monday that the volume of transactions processed through its shopping section on Nov. 26 rose 400 percent from last year, and that orders were up more than 110 percent from the previous month, although it did not give specific figures.

America Online Inc. said online shopping spending nearly tripled compared with the $1.2 billion spent during the 1998 Thanksgiving week, as more than 4 million AOL members made purchases.

And Amazon.com said that -- from Thursday midnight through Saturday -- its volume of orders was two-and-a-half times greater than the same time last year.

According to the Nielsen/NetRatings E-Commerce Holiday Index, traffic increased in excess of 18 percent from the day before Thanksgiving through Nov. 26. Traffic to toy sites jumped 83 percent over those days, according to the index. Other hot categories included gifts, online malls and electronics.

The day after Thanksgiving, known as "Black Friday," traditionally marks the kickoff for the holiday shopping season.

holiday traffic growth chart
Other online retailers reported strong sales as well.

At Bluefly, orders from Friday through Sunday jumped 700 percent from a year ago, CEO Ken Sieff said.

"The weekend went extraordinarily well. The beauty of this business is you can watch (shoppers) click through," he said.

AOL, the largest provider of consumer Internet services, said its strong start to the holiday shopping season included nearly 600,000 AOL members who shopped on the service for the first time.

More than 11 million, or 60 percent, of AOL's nearly 20 million members shop online, the company reported.

AOL buyers focused their shopping on toys, apparel, flowers and sporting goods as strong initial categories, it said.

Amazon spokesman Paul Chappelli said Amazon has been working hard to ensure that it would be able to handle the holiday crush. Amazon's top sellers were anything Pokemon -- including board games, gift boxes and a Pokemon version of Monopoly. The other popular games were Millennium Princess Barbie and Rock and Roll Elmo.

GPS a big seller
In electronics, Amazon's top sellers included GPS three plus personal navigator, Palm Pilots and portable CD players. In books, the Harry Potter series was popular, as was "How to Draw Pokemon."

"The majority of investments we have made for the holidays have been things like beefing up our distribution network. We have doubled the customer service staff and have introduced new features. This year there will be a lot of first time shoppers and we need to sell their needs," he said.

Chappelli said that Amazon's promotions, which include e-mail gift certificates for the toy store, aim to encourage customers to try out new departments of the store. "Eighteen months ago we were just a bookstore. People may not think of us right away for toys," he said.

Overall, analysts expect consumers to spend upwards of $8 billion online this holiday season. Even President Clinton has jumped on the bandwagon, using his weekly radio address to announce that he would be shopping online this year.

And Web sites are doing everything they can to keep online shoppers happy.

Free parking
Yahoo!, for instance, sponsored free parking spaces for a few lucky shoppers in garages in New York, Chicago and San Francisco. Other companies handed out gift certificates and bonuses such as free shipping in attempts to lure consumers online.

And some clicks-and-mortar stores are using the offline presence to boost online sales. Starting in September, Barnesandnoble.com began putting coupons into shopping bags distributed at its offline stores.

"Consumers that buy early from a merchant and realize what great deals are there, are likely to go back (to that merchant) for the rest of their holiday purchasing," said Jupiter Communications analyst Ken Cassar. "If you go to, for example, (cooking supplier) Tavolo.com, and they offer you free shipping and free gift wrap, you suddenly start thinking what kitchen products everyone on your list might like."

Bluefly's Sieff said that free shipping is an easy way to add to customer satisfaction.

"Normally shipping is a flat-rate $3.95. So to go to free shipping was not terribly expensive, and it makes a statement that we're not out to make money on every corner. Customers seem to have responded pretty well," he said.

'Consumers that buy early from a merchant and realize what great deals are there, are likely to go back (to that merchant) for the rest of their holiday purchasing.'
-- Jupiter analyst Ken Cassar

But too much traffic can also be a problem. Toy sites in particular may have suffered over the holiday weekend, with problems reported at KBKids.com and Toysrus.com.

And some of the hottest toys -- particularly some Pokemon treasures -- simply aren't available online. The Pikachu plush toy was sold out at KBKids. And eToys was sold out of all of the listed Pokemon trading cards.

Consumers may be understanding of the situation if hot toys sell out, Cassar said. What's important for e-tailers is to make sure that they're upfront about shortages.

"Where people justifiably become upset is when products are shown on the site as in stock and they're not," he said. "Getting that e-mail a couple of days later explaining it's not in inventory doesn't cut it."