Online Holiday Sales Expected to Increase 16% This Year

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Online retail sales in the U.S. this holiday season are expected to increase nearly 16% year over year, thanks in part to spending by affluent consumers, according to a projection released recently by Forrester Research.

Consumers in November and December will spend $51.7 billion for online purchases, up 15.7% from $44.7 billion for the same period last year, according to the report, “U.S. Online Holiday Retail Forecast 2010,” written by Forrester analyst Sucharita Mulpuru. The forecast predicts that overall holiday retail sales will increase 13%.

Much of the growth for online holiday sales this year is expected to come from affluent buyers.  According to the report, 87% of U.S. consumers who make at least $100,000 a year plan to spend more or the same amount of money online as they did in 2009.  Consumers earning less are less likely to spend as much online this year as in 2009.

As affluent online buyers bring more purchasing power to the net than other income groups, this difference in response supports our robust growth forecast,” Mulpuru writes.

U.S. consumers shopping online will spend an average of $338 in November and December, up 11.6% from $303 in 2009, the report adds. And those online shoppers could receive more holiday promotional messages from retailers as Christmas nears.  Despite industrywide optimism, retailers are not relying on mere excitement; retailers are planning aggressive promotions throughout the holiday season, particularly around the key dates of Black Friday and Cyber Monday.  In fact, the majority of retailers polled plan to spend more on holiday marketing messages this year compared to 2009.  In addition, many retailers will offer buy one, get one free or similar deep discounts.

Retailers must expect heavy price-based competition this season and be prepared to pay,” Mulpuru writes.

Free shipping represents one of the most important retail battlegrounds this year, Forrester says, as 31% of U.S. online shoppers hold out for free shipping offers before making purchases.

[Source:  U.S. Online Holiday Retail Forecast 2010.  Internet Retailer/Forrester Research.  9 Nov. 2010.  Web.  11 Nov. 2010.]