Holiday Sales Expected To Break Some E-tailers

Although analysts are predicting a stellar holiday season in the world of e-commerce, e-tailers are nervously waiting to find out if their operation will make the grade or fall by the wayside.

In a PC Data survey of 5000 Internet users, 26 percent of the respondents said that they already have begun their holiday shopping, indicating that the race has already begun.

The Importance Of Holiday Sales

“This Christmas will be a defining moment for a lot of Internet retailers,” said Michael Wolf of Booz-Allen & Hamilton. “In fact, some companies will likely be swallowed up by bigger competitors if holiday sales don’t hold up.”

In addition to powerhouses such as Amazon.com, a host of e-tailers are giving it their best shot and counting on Christmas for their next big boost in the online market. Among them are new entrant eToys, as well as KBKids.com, SmarterKids.com and Toysmart.com.

Part of the challenge will be to limit potential buyers’ online surfing. The PC Data survey indicates that consumers are visiting an average of two to four sites to do comparison shopping before making a purchase.

“We were surprised at just the strength of buying activity,” said Cameron Meierhoefer, Internet analyst at PC Data Online. “The myth is true: Competition is steeper on the Internet because it’s easier to compare prices and check out the competition.”

What Consumers Are Buying

Another 40 percent of those who responded to the PC Data poll said that they plan to begin shopping before Thanksgiving. Additionally, almost half said that they plan to do more shopping online this year than they did last year, with only 14 percent saying that they plan to spend less.

PC Data asked respondents to indicate what types of merchandise they have purchased online in the past week, and if the purchases were gifts or for themselves. Almost 70 percent of those who bought toys said that the purchase was a gift.

Almost 26 percent of the respondents had purchased computer software, and 23 percent said they had bought music. Other popular items included books (18 percent), videos (13 percent) and computer hardware(12 percent).

More Companies Going Online

With numbers like these, companies not generally associated with innovation or progressive marketing are taking the online plunge. Reader’s Digest, trying to change its image from an old-line publishing company into one of a savvy direct-marketer, will launch Gifts.com next week. Of the 400 products offered, brand names such as Laura Ashley, Burberry’s and Nautica will be included.

Reader’s Digest is spending about $20 million (US$) to promote the site.

Spending an equal amount to push their own startup site is SkyMall, the company that puts catalogs in airline seat pockets. Some observers think that SkyMall’s effort probably has something to do with investors who were shaken last December when the company said that its Web sales for the year had grown to $2.1 million from $300,000 the year before. Company shares leapt an unprecedented 247 percent to $47 in one day, but once the excitement died down, so did the numbers.

Last Friday, SkyMall closed at $7 7/16.