Ka-ching! Cyber Monday saw surprise jump in sales
Wooed by heavy discounts from online retailers, consumers who had been exercising restraint during this young holiday shopping season finally let themselves go on Cyber Monday. E-commerce spending on that day, the first workday after the long Thanksgiving weekend, jumped 15% to $846 million, according to a ComScore report released this morning.
This provides much-needed relief for online merchants, which saw sales drop 2% in November -- the first ever decline after years of double-digit increases. But retailers may have had to slash away at their profit margins to get consumers buying. Here's what ComScore Chairman Gian Fulgoni said about the results:
Mark Twain might have said: "Rumors of the death of online holiday shopping have been greatly exaggerated." Consumers are clearly responding positively to retailers' aggressive online discounts. With Cyber Monday promotions beginning in earnest over the Thanksgiving weekend, consumers have finally begun to open their wallets, setting off a streak of four consecutive days of extremely strong growth, and culminating in a Cyber Monday that racked up an impressive $846 million in online spending, up 15% over last year and ranking it as the second heaviest online spending day on record. This is an extremely encouraging development for retailers and we can but hope that their aggressive discounting has still left room for profits.
With five fewer shopping days between Thanksgiving and Christmas this year than last year, retailers are pulling out all the stops to ...
... get buyers to turn over their credit cards. One in four online retailers offered free shipping, while two in five dangled discounts on select merchandise, according to Shop.org, a division of the National Retail Federation.
EBay's PayPal service said today it saw a 27% increase in online payment volume on Cyber Monday, up 60% from Black Friday.
Wall Street watches the ComScore numbers closely, and the 15% surge was higher than analysts had expected. Investment firm Piper Jaffray had projected a 5% gain. "Cyber Monday was impressive," wrote Gene Munster, a senior analyst with the firm, adding that "one weekend does not make a quarter. The key question: How much follow through for the remainder of the year?"
Another question is how many online retailers will survive the cutthroat discounting, which inevitably eats into profits, said Andrew Lipsman, a senior analyst at ComScore. "The challenge for a lot of retailers this year is surviving, maybe eking out some modest profits," he said.
One likely beneficiary: Amazon.com, whose sales correlate closely with ComScore's sales trends, according to Piper Jaffray.
"But the reality is that the economy is so tight that strong profits are out of the question for the majority of retailers," Lipsman said.
-- Alex Pham
Photo: Gareth Saunders via Flickr