- The Washington Times - Monday, December 1, 2008

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.

Retailers had holiday marketing strategies in place in August and September, before the worst of the economic downturn. “The decisions and plans made in August probably are no longer valid,” Mr. Fry said.

During this unusually frantic holiday season, retailers are making quick decisions about advertising and promotions. Inventories were set months ago, leaving sites to find the best ways to sell what they have.

“The classic weapon during the holidays is free shipping,” Mr. Fry said. Many retailers are expected to lure shoppers to their Web sites by offering free shipping, often on minimum purchases.

Brick-and-mortar shops were able to attract plenty of shoppers on Black Friday with huge discounts, but preliminary reports suggest that buying was limited and stores weren’t profiting. According to preliminary figures released Saturday by ShopperTrak RCT, a research firm that tracks total retail sales at more than 50,000 outlets, sales rose 3 percent to $10.6 billion on Friday compared with the Black Friday of a year ago.

Online retailers will be watching their daily and possibly hourly sales figures to gauge whether their efforts are working. “You get your report card every evening,” Miss Mulpuru said.

If the holiday weekend and Cyber Monday sales turn out to be comparable to the same weekend in 2007, online retailers will breathe a sigh of relief, she said. If sales figures are disappointing, however, shoppers could be greeted by aggressive marketing and special offers.

Bargains coupled with convenience have driven holiday shoppers to the Internet in increasing numbers.

“It takes two days in the mall to get fed up with it and get online,” Mr. Fry said.

Many are predicting a large number of first-time online shoppers.

“People need to know what offers are out there, and it’s easy. It takes two seconds,” said Cat Schwartz, gadget and toy director for eBay, the online auction site.

However, shoppers who have never bought gifts online face some pitfalls. Miss Schwartz recommended that they get comfortable with the experience by making a small purchase.

Todd Feinman, chief executive of Identity Finder, based in New York, noted the growing problem of identity theft.

Shoppers should have complex passwords and a different password for each site they visit, he said, and check their accounts before and after the holidays for suspicious activity.

“It’s not supposed to be overwhelming and daunting,” Mr. Feinman said of protecting information.

In past years, online retailers have experienced overloaded servers and problems with shipping and orders, Mr. Fry said.

“Every year you still have those horror stories,” he said.

New and returning customers are expecting deals and good service online. While retailers are focusing on making sales, it is in their best interest to make sure shoppers have a pleasant experience so they will want to return, Mr. Fry said.

The winners will be the retailers who can make it through the season with profits and customer loyalty intact, he said.

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