Late Shoppers Push 2006 E-Tail Tally Over $100 Billion

E-tailers rode a strong holiday season to record-smashing sales for 2006, with revenue topping US$100 billion for the first time, according to the latest data from comScore Networks.

The report said retail spending reached $102.1 billion for all of 2006, a 24 percent increase over 2005 Web spending levels. Sales during the end-of-year holiday season were up 26 percent to $24.6 billion, the company said.

comScore’s data excludes travel spending, as well as money spent on online auctions and in large-scale corporate purchases. In 2005, spending was $82.3 billion for the full year and $19.6 billion for the holiday season, which spans about eight weeks at the end of the calendar year.

comScore Chairman Gian Fulgoni called 2006 “an exceptional year for online retailers.

“Growth remained very strong,” he added. “The online holiday shopping season of course played a vital role in the year’s success, as spending accelerated during the final two months of the year, helping push total online retail spending over the $100 billion threshold.”

12 Days of Christmas

comScore also reported that e-commerce spending topped $600 million on 12 separate days during the holiday stretch, double the number of days during 2005 that recorded more than $500 million in sales. No single day during 2005 reached the $600 million level of online spending.

In 2006, the busiest online shopping day was Wednesday, Dec. 13 — more than two weeks after the newly named Cyber Monday which now kicks off the holiday shopping season — when consumers spent $667 million online. Cyber Monday, when $607 million was brought in, ranked as the 12th busiest shopping day. The later peak in spending suggests consumer were confident about shipping dates being met when buying later in the season.

comScore said the largest surge in online buying came during the three weeks leading up to Christmas, when sales rose a full 45 percent compared to the previous year.

“Online consumers pushed their buying later than ever,” Fulgoni noted.

Meanwhile, all 12 of the $600-million-plus spending days during the holiday season came on weekdays, suggesting consumers continue to do the bulk of their online buying from their workplace Internet connections, despite the continued rise in home-based broadband.

Growth Train Rolls

There had been warning signs that the rate of e-commerce growth would naturally slow as the numbers being used for comparison grew so large as to make double-digit gains more difficult. Nonetheless, the data suggest that consumers continue to embrace the Web as a shopping venue based on convenience, the ability to comparison shop easily, and other attributes.

The strong e-tail numbers contrast more flaccid data that major retailers also released on Thursday. Wal-Mart and Target (NYSE: TGT) both issued relatively weak same-store sales reports, as did some major apparel clothing chains.

Looking forward, e-commerce companies and boosters may need to remove some roadblocks to allow more growth, however.

Gartner recently reported that as much as $2 billion in additional sales was likely lost during 2006 because of security concerns among consumers.

Adding security may be easier said than done, because such measures may impede the very thing that attracts shoppers, said Gartner analyst Avivah Litan.

“E-commerce service providers need to beef up security but they must be careful to keep the added measures relatively convenient,” Litan said.

She added that smart online retail outlets can find ways to boost consumer confidence without increasing overly burdensome security requirements, such as additional authentication. One example would be to add back-end fraud protections that would be invisible to online buyers.

Other areas can also be improved. For instance, some e-tailers — such as WalMart.com and Overstock.com — experienced Web site crashes and slowdowns during the holiday period, a landmine that is more evocative of the earliest days of e-commerce.