Report: Apparel Leads Way as Online Holiday Spending Hits $18.5B

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Online shoppers spent $18.5 billion this holiday season, up 35 percent from $13.7 billion in 2002, according to the eSpending report from Nielsen//NetRatings, Harris Interactive and Goldman, Sachs & Co.


The numbers, which excluded travel, showed that apparel, toys and video games software and hardware, consumer electronics, computer hardware and peripherals, and video/DVDs generated the most sales.


Analyzed by spend, an estimated $3.8 billion in apparel was sold online over the holidays, a 40 percent rise over 2002. Toys and video game hardware and software came next, at $2.2 billion, up 33 percent. Consumer electronics rose 2 percent to $2 billion.


Also, online shoppers bought computer hardware and peripherals worth $1.7 billion and videos and DVDs valued at $1.6 billion.


In the same survey, which polled 9,517 respondents, 63 percent said they were satisfied with their online shopping, up 5 percentage points from the previous holiday season.


Respondents said they spent 19.7 percent of their holiday budget online in 2003, up from 16.3 percent in 2002.


Meanwhile, the fourth and final phase of the 2003 eHoliday Mood study from the National Retail Federation's Shop.org online retail association and Los Angeles-based comparison-shopping service BizRate.com offered revealing findings.


For instance, 59 percent of surveyed retailers reported revenue growth of 25 percent or higher for the holidays. Thirty percent saw revenue increases of 50 percent or more.


Customer satisfaction also increased. Eighty-nine percent of surveyed shoppers were somewhat or very satisfied with their online buying experience, up from 84 percent in 2002.


As predicted and reported earlier, free shipping was the most successful online promotion. Free shipping with conditions was cited by 59 percent of retailers as the most successful marketing promotion. Twenty-seven percent said online-only sales worked for them, and 24 percent named free shipping with conditions.


Also, e-mail was the best vehicle to get promotions in front of shoppers despite spam concerns. Of those responding, 86 percent of retailers said their e-mail promotions did wonders for them.


Moreover, shoppers are reading e-mails. Shop.org and BizRate found 38 percent of retailers said their e-mail open rates improved significantly or somewhat from 2002. Open rates were not disclosed.


Finally, search engine and affiliate marketing maintained their popularity in all four phases of this study. Search marketing was the second-most-successful marketing vehicle online and affiliate marketing third.


"The success of the 2003 holiday season is the result of a foundation of satisfied online shopping experiences, which have accumulated over the last few years," said Scott Silverman, executive director of Shop.org, Washington.


"Additionally," he said, "the number of first-time shoppers continues to grow ... The data show that online retail complements, not cannibalizes, offline channels. According to Shop.org's State of Retailing Online 6.0 study, 40 percent of online customers in 2002 were completely new to retailers' entire businesses."


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