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Year Ends with Huge E-Commerce Surge

Year Ends with Huge E-Commerce Surge

Despite the uptick in sales and e-retail stock prices, some Internet analysts have hinted that online holiday sales may not grow at all this year.

By Jim Battey and Clare Saliba
12/26/01 2:09 PM PT

Many of the top e-commerce companies are enjoying a happy holiday season, with Internet heavyweights Yahoo! (Nasdaq: YHOO) and Amazon (Nasdaq: AMZN) among the sites enjoying significant sales gains.

Yahoo! said Wednesday that its sales volume surged more than 86 percent during the post-Thanksgiving buying period over last year's levels. Amazon is also posting strong holiday sales, according to a research note issued Wednesday by Safa Rashtchy, an Internet analyst at USB Piper Jaffray.

Rashtchy's report stated that full holiday traffic and purchases on Amazon showed continued strength in units purchased amid a surprise increase in electronics prices.

The investment firm also said Amazon's strength in unit sales will more than offset lower overall average prices, boosting top-line growth. USB Piper Jaffray said they expect Amazon to meet or beat its fourth-quarter revenue and profit targets.

'Critical Period'

In all, Yahoo! estimated that its users spent US$10.3 billion online in the fourth quarter of 2001, with the most popular product categories ranging from video game consoles and digital cameras to toys and apparel.

"The holiday season is a critical period for Yahoo! Shopping, and we are proud to announce that our Yahoo! Shopping business has maintained extremely strong growth momentum," said Yahoo! shopping vice president and general manager Rob Solomon.

"Our commitment to enhancing our consumer and merchant offerings is one of the driving factors behind our ability to successfully capture increasingly more market share."

Slashing Prices

Seeking to build on this momentum, Yahoo! also announced that it is launching a post-holiday sales center that will be promoted in its shopping and auctions channels.

Some Internet marketers are taking a cue from real-world retailers, which are slashing prices to bargain-basement levels in an effort to prop up sagging earnings figures.

Yahoo! said that companies such as Eddie Bauer, Eluxury.com, Godiva, Old Navy, and SonyStyle will be offering exclusive online specials, as well as winter clearance sales of 50 to 70 percent off their merchandise.

Stocks Surging

The dose of good news from Yahoo! and USB Piper Jaffray's positive Amazon report helped stoke investor optimism in mid-day trading Wednesday. Yahoo! gained $1.50 to $18.00 per share, while Amazon added $1.20 to pass $11.00 per share.

Online auction giant eBay (Nasdaq: EBAY) also received a nice boost, posting a healthy $2.80 per share increase in early trading to go to $66.60.

Too Little, Too Late?

Despite the uptick in retail stocks, some Internet analysts have hinted that online holiday sales may not grow at all this year. Last week, Forrester Research cut its estimate for spending during the holiday season to $8 billion, which would represent a significant drop from the $10 billion it said consumers spent during the 2000 season.

Forrester had originally forecast an $11 billion holiday season, which would have represented a modest 10 percent increase.

However, industry analysts said a surge in late-season online traffic holds the possibility that 2001 sales expectations may be exceeded.

Also last week, Jupiter said the majority of online shopping activity seemed to be occurring closer to Christmas as consumers held out to try to get better deals on their purchases. Jupiter is still predicting sales of $11.9 billion for this holiday season.


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