The Silver Twinkle in Holiday 2001

After a devastating year for dot coms, some good news has finally emerged. A
year of downbeat new releases has concluded with a very promising up note,
brining cheer to Net retailers. Call it whatever cliché you like, the silver
lining around the black cloud, or the twinkle in Santa's eye, but online
retail sites have much to celebrate from 2001 holiday sales season.

As noted in an early eBiz column, the season started with a promising lift
over the Thanksgiving weekend, which is the traditional launch of Christmas
gift buying. But unlike the year before, the good news continued all though
the season. And the online cheer came at a time when offline retailers were
fighting for their share of a downbeat seasonal market.

Encouraging statistics were released by Goldman Sachs, Harris Interactive and
Nielsen/NetRatings in their group "eSpending" report of online spending and
traffic. The gist is that U.S. consumers spent $13.8 billion online, up 15
percent from the 2000 holiday season.

The Jupiter Media Metrix Holiday 2001 E-commerce Series delivered some very
encouraging news, showing that traffic at online sites was up 50 percent from
a year earlier, and up 95 percent from 1999. Not surprisingly, the traffic
and sales peaked during the first two weeks of December, a week or two
earlier than the peak for offline retailers. In each of the weeks ended
December 7 and December 14, online spenders exceeded $2.5 billion in
purchases.

"With the holiday-buying season behind us, we're left with one inescapable
truth: the Internet has become an integral part of holiday shopping," said
Charles Buchwalter, VP media research at Jupiter Media Metrix. "Unlike 2000,
when online shopping started strong but then fell off, online shopping this
year started strong and ended even stronger."

As well as raw numbers of shoppers, the Internet also claimed a good
percentage of American consumers. On any given week of November and December
the number of shoppers exceeded 10 percent of the U.S. population. During
most weeks the shoppers constituted more than 15 percent of Americans, and on
the week of December a full 20 percent of the U.S. population purchased goods
over the Internet.

According to Jupiter, the Net retailers that saw the greatest increase in
sales also have a brick component. While the Internet as a whole experienced
a 50 percent increase in sales, the traditional retailers saw their Web sales
grow by 73 percent over 2000. "We've been waiting for the inevitable
dominance of traditional retailers over their pure-play counterparts, and it
appears that 2001 may have been the year when it finally happened," said Ken
Cassar, senior analyst at Jupiter Research. "With a few exceptions such as
Amazon.com, the dominant retailers that sell merchandise directly from their
sites tend to be affiliated with brick-and-mortar stores and catalogs." The
top three traditional retailers during the holiday season were Columbia
House, with 598,000 average daily unique visitors, Toysrus with 515,000 and
Barnesandnoble with 447,000.

As well as the good news, there were also some less exciting developments
during the holiday season. The volume of orders that did not arrive on time
for Christmas did not improve over 2000. Both years came in with a dismal 12
percent late delivery. The top performers for on-time delivery were sporting
goods, health and beauty, and food and drink. Many online retailers blamed
late shipments on delivery services. As for actual in-stock items, Net
retailers actually did better than the year before, so there may be some
merit to their complains about delivery companies.

Overall, the 2001 holiday season was more than a silver lining around the
dark cloud of the 2001 dot com disaster. The Christmas season may actually
have ushered in a break in the stormy clouds, and that could indicate some
real sunshine. Online retailing is clearly here to stay, even if the big
numbers are collecting on the balance sheets of the major offline retailers.