Posted by: Rob Hof on January 9, 2005
Longtime tech watcher Patty Seybold, chief executive of market researcher Patricia Seybold Group, just flagged a milestone that even boosters of online shopping missed. According to her Jan. 6 research note, online holiday sales now comprise more than 10% of overall retail sales. But hold it—isn’t it common knowledge that, holidays aside, online sales have yet to top 4% of the total? Yes, but Seybold’s math looks sound. A report released Jan. 3 by the Goldman Sachs, Harris Interactive, and Nielsen//NetRatings said U.S. Web shoppers spent about $23.2 billion over the holidays, which works out to 10.5% of the National Retail Federation’s estimate of $220 billion for all holiday shopping.
So why the sudden jump in market share? Seybold thinks it’s partly that traditional retailers finally got it right online this year, with sites that work much better than in previous years. But she also thinks Amazon.com and other pure plays did well, too, especially with increasingly time-strapped buyers. And it looks like the rise of Google and comparison shopping sites such as Shopping.com gave a big boost to niche retailers such as Mainely Twigs. Now, they can cost-effectively compete with the big guys by using paid-search ads instead of costly ads in mainstream media. “That is what the Internet does—you get a lot of niche players,” Seybold told me. “There isn’t really a retailer you CAN’T buy from online now.” Laggards, take heed: The Web can’t be an afterthought anymore.