ComScore: Travel slows but retail grows

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Total online spending by consumers reached $41.3 billion in the third quarter, representing a 16 percent increase versus the same period in 2005, according to a recent comScore Networks U.S. e-commerce report.

The report looked at sales estimates for the third quarter of 2006 and the entire year forecast, finding that online non-travel spending increased to $23.1 billion, up 23 percent from last year's $18.8 billion in the third quarter. Online travel spending so far this year rose 13 percent to $52.9 billion and third-quarter revenue in this sector was $18.2 billion, up only 9 percent from $16.8 billion in last year.

"Today, there are broader online offerings from more retailers covering more product categories and retail sites are easier to navigate and use," said Gian Fulgoni, chairman of comScore.

Free shipping, the mainstream acceptance of broadband, consumers being too busy to go to retail stores, general experience and trust in purchasing online also contribute to this rise in spending, Mr. Fulgoni said.

While total non-travel spending rose 23 percent, some retail categories far outperformed the average, including consumer electronics, which rose 42 percent, and apparel and accessories, which was up 32 percent versus the same quarter last year.

Year-to-date online spending remains strong and on target with estimates of $170 billion in 2006.

Through the first three quarters of 2006, total e-commerce spending rose 19 percent compared with last year to $122.1 billion, buoyed by a 24 percent increase in non-travel spending to $69.1 billion.

Overall, comScore currently forecasts that total consumer online spending in 2006 should reach approximately $170 billion. Of that total, comScore estimates that non-travel e-commerce will break the $100 billion threshold for the first time.

The slower growth rate in online travel spending may be because almost 70 percent of online travel spending comes from air travel, a sector already well penetrated online. Thus, according to Mr. Fulgoni, there are fewer people left to migrate online to conduct a purchase.

"Non-travel retailers are still very excited about the growth potential that exists online, which excluding food, beverages, autos and gas, online spending only represents 7 percent of all retail spending, so there is a lot of upside," Mr. Fulgoni said.

"In contrast, travel aggregators are very concerned about the slowdown in market growth and the intense competition they face from other aggregators as well as from the brand name airlines and hotels," he said.

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