May 8, 2024

BUSINESS: Social Media on Cyber Monday

November 26, 2012

Article source: http://www.nytimes.com/video/2012/11/26/business/100000001923478/imescast-mediatech-november-26-2012.html?partner=rss&emc=rss

Bits Blog: E-Commerce Sales Are Booming, Thanks to Discounts and Free Shipping

Matt Cardy/Getty ImagesAn Amazon fulfillment center.

Online, at least, shoppers are spending money. Lots of it.

People have spent $18.7 billion on e-commerce sites so far this holiday shopping season, 15 percent more than last year during the corresponding days, according to comScore. They spent $6 billion the week that ended Dec. 2, including Black Friday and Cyber Monday, and spent more than $1 billion on three separate days that week, after breaking the billion-dollar mark for the first time on Cyber Monday last year.

But retailers are paying for the surge in spending by offering discounts and free shipping.

They have offered free shipping, which Web shoppers have grown accustomed to, at record levels, comScore said. Almost two-thirds of holiday purchases during the heavy shopping weeks before and after Thanksgiving included free shipping, about 10 percentage points higher than last year.

And many retailers extended their deals beyond Cyber Monday. Target.com called its week of sales Cyber Week, and Amazon.com started a week of deals on Sunday.

RetailMeNot.com, which collects coupons for e-commerce sites, said that visits to the site over Thanksgiving weekend increased 50 percent over last year, and that purchases by people who sought coupons on RetailMeNot increased 70 percent over last year. The average discounts were about 20 percent.

Analysts caution that strong sales might not mean that shoppers will spend freely this year. Instead, they could be saving their shopping for days when they receive discounts. Meanwhile, retailers’ profit margins will suffer if they continue to discount deeply.

“As the deals from this week expire, it will be important to see the degree to which consumers return to the same retailers to continue their holiday shopping, thereby helping improve retailers’ profit margins, or if we experience a pullback in consumer spending, which has occurred in previous years,” said Gian M. Fulgoni, chairman of comScore.

Though people are spending more money offline, sales at bricks-and-mortar retailers are not growing nearly as quickly. Sales were up about 3 percent during Thanksgiving week.

Part of the reason is that consumers are quickly realizing that prices are generally lower online, even including tax and shipping, said Mike Fridgen, chief executive of Decide.com, a price comparison and tracking Web site and app.

Prices of popular electronics items can be 44 percent lower online and beat in-store prices 94 percent of the time for many gadgets, according to Decide.com. The prices for GPS devices, for instance, are generally 24 percent lower online, though some products, like video game consoles and Canon digital cameras, are less expensive in stores.

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