JUPITER RESEARCH REPORTS THAT 2002 ONLINE HOLIDAY SALES ARE LIKELY TO EXCEED PRESEASON EXPECTATIONS OF 17% GROWTH, BUT FREE SHIPPING COULD HURT RETAILERS IN THE LONG-TERM(New York, NY - January 6, 2003) - Jupiter Research, a division of Jupitermedia Corporation (Nasdaq: JUPM), today reported that based on early reports from online retailers, it appears that 2002 online holiday retail sales (covering the period of November 1st to December 31st) will exceed its original forecast of $13.1 billion, which would represent growth of more than 17% over the 2001 holiday period.
Jupiter Research expects to release final 2002 holiday sales figures in March pending release of actual sales results from retailers and results of a post-holiday consumer survey. "Widespread free shipping promotions are the primary reason that the 2002 holiday season was such a good one," says Ken Cassar, Senior Analyst with Jupiter Research. However, Cassar warns, "Online retailers may have created the expectation among consumers that free shipping and handling is now the norm, which puts a lot of pressure on retailers to run free shipping promotions into perpetuity."
Jupiter Research advises that rather than fighting consumers on this issue, retailers should focus on improving operational efficiencies in their warehouses and exploring cost effective means of delivering goods. According to Jupiter Research's Cassar, "Retailers that do not have to match the prices in their own brick and mortar stores should consider gradually and subtly raising prices online to cover lost shipping and handling revenue."
Online retailers did a commendable job of keeping their sites up and running despite the fact that peak day sales volume was for many retailers more than 50 percent above last year, according to Cassar. "Retailers' Web sites and fulfillment infrastructure, by and large, bore the weight of the concentrated sales volume from a short holiday selling season," he said. "What makes this performance particularly impressive is that few retailers had made substantial infrastructure upgrades prior to the 2002 holiday shopping season."
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Mary Ann Boland
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