Amazon.com Inc. (AMZN) and other Web retailers sold more products than ever this holiday season, boosted by early promotions and investments in delivery systems that helped avoid the widespread shipping snags of last year.
Online shopping is on pace to rise 16 percent to $61 billion for the November to December period, according to researcher ComScore Inc., with retailers benefiting from lower unemployment rates, higher consumer confidence and a decline in oil prices that has left shoppers with more to spend on gifts. The total includes $7.9 billion in mobile sales, ComScore said.
Amazon.com, the world’s biggest Internet retailer, hired more workers and opened new distribution centers, extending its reach to get goods to customers faster. United Parcel Service Inc. and FedEx Corp. also stepped up hiring, updated their technology and invested in infrastructure to absorb the growth. Consumers shopped earlier, responding to pre-Thanksgiving promotions and not splurging at the last minute -- something that contributed to last year’s delivery delays.
“Shoppers were aware of last year’s problems, and the e-commerce companies and shipping companies were prepared,” said Jarrett Streebin, chief executive officer of EasyPost, a San Francisco company that helps retailers coordinate labels and tracking with delivery companies. “So far, it looks like everything went really well.”
Christmas Day Shopping
On Christmas Day, consumers went online to buy music, applications and other content for new smartphones and tablets they received as gifts. Online spending increased 8.3 percent yesterday from a year earlier, International Business Machines Corp. said today. That compares with last year’s Dec. 25 growth rate of 17 percent.
Amazon.com’s sales rose 20 percent from Nov. 27 to Dec. 21, outperforming the broader industry’s growth rate of 14 percent in the same period, according to ChannelAdvisor Corp., a consulting firm that helps retailers increase sales.
The Seattle-based retailer is projected to have fourth-quarter revenue of $29.7 billion, up 16 percent from a year earlier, according to the average of analysts’ estimates compiled by Bloomberg.
More than 10 million new customers this holiday season tried Amazon Prime, the company’s $99 annual subscription that offers delivery discounts and video streaming, Amazon announced today. Those enrolled in Amazon Prime spend more on average than other customers.
Amazon prepared for the holiday crush this year by hiring 80,000 seasonal workers, up from 70,000 last year. It also operated 15 sorting centers -- up from eight last year -- where packages are organized by ZIP code and trucked to post offices for the final mile of delivery. The new sort centers helped Amazon reach more customers with Sunday deliveries, spreading orders over a greater number of days.
EBay Inc. (EBAY)’s sales growth from the day after Thanksgiving to Dec. 22 lagged behind the industry at 10 percent, according to ChannelAdvisor. Analysts predict the San Jose, California-based company will report sales for the current quarter of $4.94 billion, up 9.1 percent from a year earlier, according to data compiled by Bloomberg.
“Expectations were very low for EBay,” said Scot Wingo, chief executive officer of ChannelAdvisor. “Long-term, EBay has to do something to right the ship.”
Smaller companies helped fuel the jump in e-commerce this season by investing in technology and embracing the Web to expand their reach.
Sport Chalet Inc., a sporting-goods chain with about 50 stores in California, Nevada,Arizona and Utah, offered exclusive online discounts this year for the first time, said Don Delzell, director of online sales. The retailer realized it could alter online deals on its websites in a matter of hours, while changing promotions at all of its stores can take several days, because of the need to replace signs.
“It gives us the ability to react quickly to changes in the competitive environment,” he said.
The closely held company doesn’t disclose revenue. Shoppers spent more time on the site and traffic was up as a result of the changes made in August, Delzell said.
Jane.com, a Lehi, Utah-based online clothing-and-accessories retailer, introduced a mobile app in July that helped increase its mobile sales from 5 percent of all transactions to more than 30 percent, CEO Mike McEwan said.
The company added more clothing to its catalog, which has increased the average order size to about $26 from $15, McEwan said. Getting each shopper to spend more has the company poised to increase revenues by 135 percent in 2014, he said.
“We’re selling a lot more clothing than we used to,” he said.
Growth in e-commerce will continue to outpace overall expansion in retail in coming years as consumers shift spending from brick-and-mortar stores to websites and mobile apps, according to EMarketer Inc.
Online sales in the U.S. will top $305 billion this year, representing 6.5 percent of all retail sales, the market researcher projects. The U.S. e-commerce market will grow to $494 billion in 2018, representing 8.9 percent of total retail sales, according to EMarketer.
Courtesy of Bloomberg News.
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