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JupiterResearch: Online Holiday Sales to Increase 18%
November 1, 2005

JupiterResearch, a division of Jupitermedia Corporation, forecasts that 2005 online holiday sales will reach $26 billion in the United States, an 18 percent increase over 2004. In the report entitled: "Holiday 2005 Forecast: Addressing The Impact of Macro-Economic Factors on Holiday Online Retail Sales," JupiterResearch details its findings which also indicate that online retailers will experience reduced margins. Retailers will be plagued by higher fuel surcharges on order shipments while feeling compelled to offer free shipping in order to capture sales equal to last year and stem attrition to competitors who are offering free shipping.

"Channel adoption is driving the projected increase in online retail sales during the upcoming holiday season and macroeconomics are driving the reduced margins for the retailers," said Patti Freeman Evans, Analyst at JupiterResearch. "While the expected sales increase for retailers is significant, consumers are feeling pinched by expensive energy prices. They will respond to free shipping offers, but, these offers will not be enough to encourage them to spend more than last year," added Evans.

JupiterResearch found that 56 percent of consumers who intend to purchase online this holiday season do say free shipping is more important this year because of high fuel and gas prices. However, there is no indication that customers who plan to buy online this holiday season will be any more motivated to increase their spending by free shipping offers. One piece of good news from the JupiterResearch report is that retailers may be able to capture incremental sales by targeting males that have been purchasing online for less than a year with "avoid the malls", "save gas" and convenience messaging.

"While the Internet continues its maturation as an online shopping channel, external macroeconomic events may have a greater impact on sales growth, potentially even more significantly at the critical holiday season," said David Schatsky, Senior Vice President of Research at JupiterResearch. "For all of 2005, U.S. online retail sales are on target to reach $79 billion versus $66 billion in 2004," added Schatsky.

JupiterResearch's report provides recommendations on reaching new online shoppers, the macroeconomic effects on online retailing and consumer attitudes toward free shipping and deferred payment plans.

The complete findings of this report are immediately available to JupiterResearch clients online. For additional information on the report, visit www.jupiterresearch.com.

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