Is This What Saved Christmas for Online Retailers?
Don't call it a comeback. After a mid-holiday-season shopping lull sparked worries about a drop in online spending, Web retailers pulled off a late-December surge to get those revenue figures back on track.
That's good news for retailers' top lines, but profit margins probably took a hit in the process.
According to comScore, last week's five-day online haul was up a massive 53%, led by $1.01 billion in sales booked on Monday, Dec. 17. That marked the 12th billion-dollar sales day of the season. And it helped boost total holiday growth by 16%, better than the 13% rise that the industry was on pace to set just a week before.
A late-season surge like that isn't typical. ChannelAdvisor noted last week that cyber sales had slowed down appreciably after the Black Friday bounce. The e-commerce watcher estimated Amazon.com's early-December same-store sales results as up just 26%, compared to a 41% boost in November. eBay also saw sales growth tick down for the first two weeks of December, up 23% versus the 27% bounce last month. Overall, sales looked to be following the multiyear trend of moving earlier in the calendar, making for a front-loaded shopping season.
But the pullback was reversed last week as retailers offered aggressive free shipping deals and guaranteed delivery by Christmas. Wal-Mart gave online shoppers free shipping on most orders over $45, while Target waived shipping fees for most orders over $50. Costco guaranteed delivery by Christmas Eve for orders placed as late as 11:59 PST last Thursday night.
And for Amazon's part, the e-tailing giant has been more generous with shipping charges than Santa himself. The company ate about $2.5 billion in shipping costs last year and is on pace to hit $3 billion this year, in what's become a huge drag on profit margins.
Last week's online spending bounce suggests that other retailers are following that pricey example. They kept their sales flowing through what should have been a down week, even if it meant taking a bath on shipping costs.
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The article Is This What Saved Christmas for Online Retailers? originally appeared on Fool.com.Fool contributor Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool owns shares of Amazon.com and Costco Wholesale. Motley Fool newsletter services recommend Amazon.com, Costco Wholesale, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.