E-commerce spending picks up speed

E-commerce sales for the holiday are doing so well that it is almost certain they will post a gain for the holiday season.

According to Comscore, the online research firm, "For the holiday season-to-date, $19.9 billion has been spent online, marking a 3% increase versus the corresponding days last year. The most recent week saw above average online spending growth of 4% versus a year ago, as two individual days surpassed $800 million in spending, led by Thursday, Dec. 10, with $852 million."

Are the sales coming at the expense of "brick-and-mortar" stores, or are they really net sales that augment sales at retail locations? The trend is probably not good for conventional retailers.

Since the mid-1990s, when e-commerce sites began to do business over dial-up, online shopping revenue has grown faster than traditional store sales almost every year. The 2008 shopping season, when all retailers took a hit, may have been an exception. But e-commerce could be going back to a growth rate that is faster than those at physical stores. Government data for November sales and private research information show that store sales are flat to up 2%. If that is accurate, e-commerce is taking more market share once again.

E-commerce sites have a number of advantages over stores, and in a weak holiday season those advantages may be magnified. Online sites like Amazon (AMZN) can change prices on products in a matter of minutes to bring in traffic -- as it did recently with e-books and DVDs. Physical stores need longer to get word about special offers out to the public.

E-commerce sites are also likely to benefit from spontaneous buying. A customer who finds that he or she has a little more money to spend for the holidays may turn to the PC to quickly select a few last-minute gifts, instead of braving the mall to make those final purchases.

E-commerce will have a good holiday season. Store locations may not.

Read Full Story