With One Notable 'Bah Humbug,' Online Retailers Claim Growth

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If reports of online shopping's growth during the most dismal holiday shopping season in recent memory have left you with any holiday spirit, a chat with Forrester Research analyst Carrie Johnson will cure it.


Johnson has put out a report forecasting that online shoppers would spend $8 billion this holiday season, a downward revision from the $11 billion forecast Forrester, Cambridge, MA, made Sept. 20.


"Online spending may be up month to month, but year over year it's down," said the report dubbed "Christmas 2001: Bah Humbug." "The $4.9 billion consumers spent last month pales in comparison to the $6.2 billion they spent during November 2000."


Johnson contends that retailers have resorted to "Crazy Eddie-type" offline holiday promotions that are killing consumers' drive to spend online.


"Everybody got bombarded this season with coupons redeemable mostly only offline, because that's where the retailers' biggest pain is this holiday season," she said. "If sales are way down offline, it's a much bigger problem than if sales are down online."


A Gap e-mail coupon offering 30 percent off in-store purchases was one example of the type of promotion that hurt online sales, Johnson said. Her prediction: "a blood bath come January when retailers report results."


However, don't tell eBags to put away the champagne. The handbag, backpack and luggage online-only merchant is claiming not only its best year but that December is its first profitable month ever. Traffic is reportedly up more than 80 percent, and sales are up more than 40 percent over last holiday season.


"Our team is overjoyed," said Peter Cobb, co-founder and vice president of marketing at eBags, Denver. "There will be some celebrating here. It [profitability] means we're one of the survivors."


Launched in March 1999, eBags' sales will hit $20 million to $30 million by year end, one third of that coming in the past three months, Cobb said. The company has two other high-volume seasons: spring for Mother's Day and Father's Day, and July and August for back to school.


"We're fortunate that we don't make or break our year on a two week holiday," he said.


Average order size at eBags has fallen from $81 to $77. Its top sellers for this holiday season are backpacks and so-called urban gear, or messenger bags. EBags' visit-to-purchase conversion rate is 3 percent this year, said Cobb, up from 2.75 percent last year.


"There are fewer places to go to purchase and there are several of us emerging as valid. Before you could go to 10 sites, now it's kind of distilled down to where we're the only place where they can go to get these bags."


QVC.com, West Chester, PA also is claiming double-digit sales growth over last year. QVC.com's hottest sellers are reportedly gourmet cooking merchandise and electronics.


"Customers are cocooning and want to stay home," said Bob Myers, vice president of merchandising at QVC.com.


Meanwhile, Jupiter Media Metrix claimed that during the week ending Dec. 16, Web visitors from home and work to 500 shopping sites increased 55 percent versus the same week last year, climbing from 33.8 million to 52.3 million unique visitors. The top five most trafficked sites that week in order from top to bottom, according to Jupiter Media Metrix, New York, were eBay.com, Amazon.com, MyPoints.com, Half.com and BizRate.com.


Jupiter monitors the behavior of 60,000 Internet volunteers and extrapolates.


In other online shopping news, AOL has a new, but not so surprising entrant on its top-five selling category list.


"We've essentially seen a Harry Potter phenomenon online," said Ellen Mellody, spokeswoman at America Online, Dulles, VA.


On AOL, the five top-selling merchandise categories in order from top to bottom are: women's apparel, teen apparel, electronic games, portable and mobile electronic devices, and Harry Potter memorabilia. Apparel has claimed the No. 1 spot on AOL for the past two seasons.


This year, though, the online service's 32 million members also are apparently looking to stretch their holiday shopping dollars further.


"We've seen a lot more bargain hunting than in the past," Mellody said.


Elaine Rubin, chairwoman of trade group Shop.org, said almost every retailer she has spoken to claims its online sales are meeting pre-Sept. 11 projections but online sales are not making up for a dismal year offline.


"While online is far exceeding expectations set a year ago," Rubin said, "their store sales are suffering and their catalog sales are suffering, and, at the end of the day, you're one corporation."


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