Free shipping helped boost online holiday sales

Associated Press

NEW YORK — Online holiday sales, helped by free shipping offers, are turning out to be robust, according to several preliminary reports released yesterday, providing a bright spot in an otherwise mediocre shopping season.

The double-digit percentage increases at online retailers far outstripped the slim increases estimated for sales in stores. After a better-than-expected surge after Thanksgiving, sales at stores were disappointing throughout the season, despite aggressive discounting.

"Compared to an anemic holiday season (at stores,) this was a terrific holiday season for online retailers," said Ken Cassar, senior analyst at Jupiter Research.

But Cassar warned that given that free shipping was an important driver of online sales, he is worried about companies' profits. He added that it will be hard for online retailers to wean themselves away from free shipping and handling, and consequently, they may have to increase prices as an alternative.

Jupiter Research announced yesterday that e-commerce sales will exceed its original forecast of $13.1 billion, which would represent growth of more than 17 percent from the year-ago period, based on early reports from online retailers.

Now, Jupiter Research anticipates a 20 percent to 24 percent gain for the holiday 2002 season, which was from Nov. 1 through Dec. 31. It is expected to release final numbers in March.

A separate report from Nielsen/NetRatings, Goldman Sachs and Harris Interactive said that online spending jumped more than 24 percent to $13.7 billion, from Nov. 2 through Dec. 27, up from $11 billion in the year-ago period. That was in line with projections for sales increases in the low 20 percent range.