Online Retail Sales Hot Heading Into Holidays


According to comScore’s tracking of online retail in the U.S., online sales jumped 23% from July to September 2007, over the same third-quarter sales reported in 2006. Forrester Research analyst Sucharita Mulpuru, quoted in E-Commerce Times, noted that the 20-percent-plus growth rate for online retail outstripped the rest of the retail industry.

ComScore found that a soft 1Q 2007 in online retail simply mirrored a weakness in offline retail at the same time. But in the following two quarters, heading into the holiday season for 2007, online sales have resumed their growth rate of 20% or better.

The top performer in increased online sales was, predictably, online gaming, with the 2007 release of new Nintendo Wii and Sony Playstation 3 consoles, plus the hot “Halo 3” game.

Perhaps less predictable was the 58% increase in online consumer electronics, as the category was led by a high-ticket item, flat-panel TVs, which consumers have been reluctant to buy online in the past. Experts from comScore and the Hurwitz research firm speculate that resistance to purchasing higher-priced items online is dissolving as (1) shopping search engines offer price comparisons of consumer electronics, such as flat-panel TVs, which is closing more online purchases as verifiable “good deals;” and (2) consumer electronics retail sites have been building their online brand awareness and trust, which is now paying off in online buyer acceptance.

One impossible-to-predict category was online toy sales, after the all the bad press and import toy recalls during 2007. Online toy sales actually grew from July to September, leading a comScore analyst to speculate that online toy buyers were either replacing recalled toys, or buying in advance of the holiday rush and anticipated toy shortages caused by the recalls. Industry analysts are not certain, going into the 4th Quarter holiday season, if online toy sales will keep growing, or if 3Q sales were simply a response to toy recalls.

Entering holiday season 2007, online sales should be at least as strong as the typical peak sales for offline retail during the holidays. With a third quarter growth rate of 23% — reaching $28.4 Billion – online retail sales may still outshine its offline cousins in the above-noted categories.

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