Forecasts of $26 Billion in 2005 Holiday Sales

    November 1, 2005

JupiterResearch released their projections for the coming holiday season and they look promising. The report, “Holiday 2005 Forecast: Addressing The Impact of Macro-Economic Factors on Holiday Online Retail Sales,” examines not only promised higher percentages of sales but also some problems for the coming holiday season.

One problem rearing its head for all retailers will be reduced margins due to high fuel surcharges for shipping in both overhead as well as order shipment costs. The problem will be many retailers may want offer free shipping and just eat the shipping costs.

“Channel adoption is driving the projected increase in online retail sales during the upcoming holiday season and macroeconomics are driving the reduced margins for the retailers,” said Patti Freeman Evans, Analyst at JupiterResearch.

“While the expected sales increase for retailers is significant, consumers are feeling pinched by expensive energy prices. They will respond to free shipping offers, but, these offers will not be enough to encourage them to spend more than last year,” added Evans.

JupiterResearch also stated 56% of consumers who intend to purchase online this holiday season say free shipping is important this year because of high fuel costs. They followed up by saying there’s no indication customers who plan to buy online this season will purchase any more because of free shipping offers.

One approach they suggested would work for incremental sales would be by targeting males who’ve been purchasing online less than a year, saying things like “avoid the malls,” “save gas” and convenience messaging.

“While the Internet continues its maturation as an online shopping channel, external macroeconomic events may have a greater impact on sales growth, potentially even more significantly at the critical holiday season,” said David Schatsky, Senior Vice President of Research at JupiterResearch. “For all of 2005, U.S. online retail sales are on target to reach $79 billion versus $66 billion in 2004,” added Schatsky.

John Stith is a staff writer for WebProNews covering technology and business.