Find Software and Service Providers on ALL EC Ecommerce Exchange
Welcome Guest | Sign In

Will the Real E-Commerce Holiday Forecast Please Stand Up?

By Michael Mahoney
Nov 15, 2001 5:51 PM PT

'Tis the season for online shopping forecasts, and with each passing day, it seems like there are new holiday predictions to digest like so much turkey and cranberry sauce.

Will the Real E-Commerce Holiday Forecast Please Stand Up?

How can e-tailers rely on these numbers when every research firm has arrived at a different figure for the projected sales?

"I would focus less on the absolute numbers and more on the growth," Jupiter Media Metrix analyst Ken Cassar told the E-Commerce Times. "What you typically find is some firms define the holiday season differently (time period, geography, etc.). Because it's so difficult to align those factors, its best to focus on the growth rates they represent."

A survey of this season's forecasts reveals that most of the major research firms are actually fairly close in their holiday predictions, but with some important distinctions.

Naughty or Nice?

So far, Gartner, Jupiter and Forrester Research have arrived with the highest holiday sales projections for e-commerce, at US$11.86 billion, $11.9 billion, and $11 billion respectively.

Predictions by Nielsen//NetRatings and The Yankee Group came in lower, at $10 billion and $9.5 billion.

All of the firms determined that there will be respectable growth for e-commerce this holiday season -- with more shoppers spending more dollars than ever before -- though signs indicate the end of the triple-digit expansion the industry enjoyed for several years.

When looking at the predicted growth rates, however, there are huge differences among the analysts' numbers, with year-over-year growth rates ranging anywhere from 7 to 40 percent.

Play It Sage

"Whenever you're forecasting, the one thing you can be sure of is you're not going to be exactly right," Cassar said. "We'd rather be a little bit low than a little bit high."

According to Cassar,'s recent 13 percent quarterly drop in the books/music/video category a portent of things to come.

For its part, Yankee increased its forecast for the percentage of total retail sales that will be transacted online from 1.2 to 1.3 percent.

"While there may be more spending online compared to last year, the more significant factor at work is the decrease in total retail spending we believe we'll see," Yankee analyst Paul Ritter told the E-Commerce Times. "The major driver is the impact of macroeconomic conditions."

It's the Economy

These conditions include increased layoffs, expected reductions in total consumer spending (as well as low consumer confidence levels), and less discretionary income.

However, both Ritter and Cassar agree the affects of the September 11th terrorist attacks on e-tail spending will probably be negligible.

"We've speculated that the net impact is zero," Cassar said. "The negative economic impact of the attacks will be offset by the increased likelihood that consumers will shift some of their dollars to the Web."

In a consumer survey conducted by Jupiter several weeks after the attacks, 45 percent of consumer respondents stated they would avoid shopping at malls because of the crowds, nearly identical to last year's response of 44 percent, when there was no terrorist threat at issue.

Real World Rules

The positive forecasts for online holiday sales appear to be accurate when compared to the holiday predictions for offline sales.

The most recent report from the National Retail Federation (NRF), predicted holiday sales for November and December will increase about 2.5 to 3 percent.

Four out of five consumers in the NRF report said they plan to buy gifts and cards this holiday season for about the same number or more people than last year, spending an average of $940.

Everything's Connected

The news that e-commerce will be heavily impacted by the larger economic slump seems to fly in the face of what analysts have been telling us for the past several years: that because e-commerce is such a small portion of the overall economic picture, it is virtually immune to a larger economic recession.

That tune has now changed.

"To a large extent [e-commerce] was immune because its growth rates were so fast," Cassar said. "However, now as its rates come down to earth, what's going on with the economy as a whole has a substantial impact."

That is not necessarily a bad thing, Cassar said.

"I think that a slow growth holiday season may be the best thing that can happen for online retailers," Cassar said. "In the past they've had to ramp up so aggressively every year for the holidays and overspent. There will be less of that this year. The benefit is that it increases the likelihood that a particular e-tailer will be able to balance its own need for profitability with consumer expectations."

Facebook Twitter LinkedIn Google+ RSS
How do you feel about accidents that occur when self-driving vehicles are being tested?
Self-driving vehicles should be banned -- one death is one too many.
Autonomous vehicles could save thousands of lives -- the tests should continue.
Companies with bad safety records should have to stop testing.
Accidents happen -- we should investigate and learn from them.
The tests are pointless -- most people will never trust software and sensors.
Most injuries and fatalities in self-driving auto tests are due to human error.