Online retailers are holding their breath

Early sales figures signal gloom

By Heather Cobun | Monday, December 1, 2008

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The online shopping industry has its fingers hovering over the panic button but probably won't push it until the dust settles from the Thanksgiving holiday weekend.

The preliminary reports on weekend traffic and sales for online retailers are not encouraging, matching predictions at traditional brick-and-mortar stores. Chicago digital marketing firm comScore said Sunday that online spending on Thanksgiving Day and the subsequent Friday rose just 2 percent over the same two days a year ago.

Electronic-commerce spending declined the first 23 days of November, by 4 percent, compared with the same period last year, leaving many retailers to hang their hopes on the holiday weekend, according to comScore.

"All of the signs are very negative," said Sucharita Mulpuru, a retail analyst with Boston-based Forrester Research.

While brick-and-mortar stores traditionally enjoy some of their highest traffic of the season on the Friday after Thanksgiving, dubbed "Black Friday," a spike in online shopping activity typically occurs the following Monday - largely the result of people going back to work and shopping on office computers. The National Retail Federation (NRF) in 2005 declared the day Cyber Monday.

Consumers appear to be holding back this year, and retail analysts hope it's because they are shopping around and waiting for the best deals. "Consumers are procrastinators," Miss Mulpuru said.

Online retailers' weekend traffic and sales will shape the marketing plans that follow, including deep discounts and free shipping.

"This is very much a very tactical Christmas," said David Fry, president of Fry Inc., an electronic-commerce design and development company based in Ann Arbor, Mich.

Promotional e-mails were sent earlier than usual, he said, and retailers will watch sales closely.

"No one's thinking strategically about next year yet. It's all about the holidays," he said.

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