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Online Buying to Peak for Holidays

November 13, 2000|From Bloomberg News

NEW YORK — U.S. Internet spending will peak this year during an intense three-week period in which consumers will spend billions of dollars on holiday gifts and other items, Jupiter Research is to report today.

The frenzied shopping pace will occur because many shoppers will try to order by Dec. 12, the day when many Web sites stop guaranteeing delivery by Christmas under regular shipping rates, said Ken Cassar, a senior analyst for the research firm.

"Anywhere between a quarter or a third of the [annual] sales will occur in 20 days," Cassar said. After that, consumers will have to pay more to get their orders before the holiday, he said.

Jupiter is forecasting Internet sales will reach $11.6 billion in November and December, a 66% increase from last year's $7 billion.

The unit of Jupiter Media Metrix Inc. predicts 35 million people will shop online during the holidays, up from about 20 million last year. Jupiter has forecast sales this year will reach $17.3 billion. It said it will revise that up in coming days.

Retailers are expecting a deluge of orders during the three-week holiday period, though some are trying to entice consumers to shop earlier with discounts and free-shipping offers. For example, No. 1 Web retailer Amazon.com Inc. is offering free delivery of purchases of $100 or more placed before Nov. 22.

"Retailers are going to try to fight the 'spikiness' as much as they can," Cassar said.

He said traditional retailers with online stores might be able to offer in-store pickup of merchandise, while Internet retailers that offer same- or next-day delivery such as Webvan Group Inc., closely held Kozmo.com and Peapod.com Inc. might benefit from last-minute Internet shoppers.

Traditional retailers might also be in a better financial position to offer discounts and free shipping compared with some Internet-only retailers that are facing increased pressure to show profits.

The Redbook Internet Retail Index of 14 companies has declined 73% this year because of investor concerns about mounting losses and prospects for new funding. Analysts expect the holiday season will be crucial to several Web-only retailers who need to raise cash to remain in business.

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