Internet props up retail sales
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December 28, 1998: 2:43 p.m. ET
Holiday online sales triple as shoppers get more comfortable with technology
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NEW YORK (CNNfn) - Santa Claus took to the Internet in a big way this year as sales of online retailers tripled over 1997 figures, analysts said Monday.
Industry experts cited growing consumer confidence with using the Internet and mass displeasure with the shopping mall holiday battle zone as key factors behind the online buying spree.
Shock waves from the cyber-shopping blast reached Wall Street Monday, with Internet stocks rising dramatically.
James McQuivey, senior analyst with Forrester Research, said online shopping had a "stellar" holiday season, with fourth quarter sales figures reaching $3.5 billion.
"We're just in the very early stages of a very sharp growth curve," he said. "Everyone's new to this game - new shoppers, new retailers, new technology. It all caught on fire during the second half of this year, just in time for the holiday season."
Traditional retailers were not as fortunate. Overall retailers' holiday sales are estimated to have grown by about 3.5 percent - below the industry's 5 percent target. That modest gain came through the surge in online shopping.
"Online shopping just exploded this year," said Audrey Guskey, professor of marketing at Duquesne University's School of Business. "People are now finally comfortable with online shopping -- it finally happened."
Guskey said shoppers are also tired of the mall-related hassles, such as crowds and traffic.
"People want to buy gifts for their loved ones," she said, "but they want to make it as easy as possible. Traditional stores did not do as well and I think online shopping took away a lot of their business."
The Boston Consulting Group and shop.org reported that the average order was $55, up six percent over the average order placed last year during the same period.
First-time buyers were a big factor in the cyber-shopping gold rush. America Online Inc. (AOL) has had more than 1 million first-time buyers on its service this month. AOL spokeswoman Wendy Goldberg noted that the number of AOL's female shoppers has increased, rising from 16 percent in 1996 to 51 percent this year.
Goldberg said shoppers are spending more money on a wider variety of items. This year, she said, toys were the number-one item for AOL shoppers this year, followed by apparel. In 1996, computing was AOL's best-selling holiday category, although it did not make the top five for 1997 or 1998.
And experts believe the 'Net rookies are going to stick around, shopping online beyond the holidays.
"This isn't going to be a flash in the pan," McQuivey of Forrester Research said. "Last year, the people who shopped online continued to the first half of this year. And then they told their friends about it."
The season was not without its problems for the cyber-merchants. The Wall Street Journal Monday cited system collapses and slowdowns at the Barnes & Noble and eBay sites, and the e-mail messages sent by Amazon.com indicating shortages of some items.
The Journal said the results from retail stores were spotty. Apparel sales were weak, due to unseasonably warm weather. But electronic and specialty apparel sales were higher, and discount department stores such as Wal-Mart (WMT) and Target posted on-target or better sales for the holidays.
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