Will a Surge in Holiday E-Commerce Hurt Brick-and-Mortar Stores?
Online research firm comScore is considered the gold standard for Internet activity. It has forecast that online holiday sales will rise 11% this year. "The official comScore 2010 holiday season forecast is that online retail spending for the November to December period will reach $32.4 billion," the firm announced. comScore also said that online spending from Nov. 1 to Nov. 21 rose 13% to $9.01 billion when compared with the same period last year.
"The beginning of the online holiday shopping season has gotten off to an extremely positive start, outperforming our earlier expectations," said comScore chairman, Gian Fulgoni. "Despite continued high unemployment rates and other economic concerns, consumers seem to be more willing to open up their wallets this holiday season than last. While this early spending surge reflects, in part, heavy promotional activity on the part of retailers occurring earlier this season, it is nevertheless a very encouraging sign."
comScore estimates that e-commerce holiday spending rose only 4% last year. Free shipping and discounts are credited in large part for the anticipated surge this year. When asked how important free shipping is for making an online purchase this holiday season, "more than three-quarters (77%) of consumers indicated it was important," the research firm reported.
What goes unanswered in the study, however, is the extent to which online sales rob from brick-and-mortar activity. The National Retail Federation expects retail sales to be up 2.3% this year to $447.1 billion. So, online expenditures are still dwarfed by in-store activity. There is also the question of how much of e-commerce activity will happen on "online-only" sites like Amazon (AMZN) and eBay (EBAY). Analysts expect that Amazon's fourth quarter sales will be $12.4 billion, a significant portion of total online sales. This revenue clearly takes away from brick-and-mortar sales, as well as from other online shopping stores like Walmart.com.
E-commerce may rise impressively this year, but the stores in the local mall may not be helped by that.