‘Free Shipping Day’ Marks the Peak of a $30.9 Billion Holiday Online Spending Season to Date

For the first 46 days of the November – December 2011 holiday season, online spending increased 15 percent year-over-year to $30.9 billion, according to comScore, a company that measures digital data.

The most recent work week (Dec. 12-16) saw four individual days surpass $1 billion in online spending, led by Monday, December 12 with $1.13 billion and Friday, December 16 (known by the online retail industry as “Free Shipping Day”) with $1.07 billion, according to the Reston, Va.-based company. Free Shipping Day is, now in its fourth year, is a one-day, online-shopping event when thousands of merchants offer free shipping with delivery by Christmas Eve.

With the heaviest portion of the season over, Cyber Monday appears likely to rank as the heaviest online spending day of the year (at $1.25 billion) for the second consecutive season, said Gian Fulgoni, comScore chairman.

“More than $1 billion in spending on Free Shipping Day put the exclamation point on what will almost certainly be the heaviest week of the online holiday shopping season,” Fulgoni said. “While next week may see another strong day or two at the beginning of the week, it’s clear that we have now reached the crescendo for this season and that spending will begin to slow as we get closer to Christmas, leaving Cyber Monday as the top ranked shopping day for the second year in a row.”

Following a decline in the second week of December, free shipping rebounded during this most recent week, which concluded with Free Shipping Day, according to comScore’s analysis of e-commerce transactions. Each week of the online holiday season-to-date has seen free shipping occur on at least half of all transactions. For the five-day week ending with Free Shipping Day, the percentage of transactions with free shipping reached 56 percent, nearly 4 percentage points higher than the corresponding time period last year.

“Free shipping is undoubtedly one of the most important incentives for consumers and has become a key driver of online buying activity over the past few years,” Fulgoni said. “This season has seen a continuation of the trend where an increasing percentage of transactions involve free shipping, as more consumers demand it and more retailers provide it. During the week of Thanksgiving and Cyber Week we saw at least 3 in 5 transactions use free shipping, significantly higher rates than we’ve ever previously observed.”

Another $5.9 Billion Dollar Week for Online Holiday Sales

For the second consecutive week, online sales hit the $5.9 billion mark and saw growth rates remain in line with the season-to-date at 15-percent, reports comScore, which measures digital data.

In addition, the most recent week (ending December 9) had three days surpassing $1 billion in sales, the Reston, Va.-based company reports. For the holiday season-to-date, six individual days have surpassed the billion dollar threshold, led by Cyber Monday at $1.25 billion.

“These highlights represent another very positive sign for the holiday shopping season, said comScore chairman Gian Fulgoni. The week following ‘Cyber Week’ (which includes Cyber Monday the Monday after Black Friday) often experiences relative softness in spending momentum due to retailers pulling back on their promotional activity. As we enter what will be the heaviest week of the season for online retailers … all signs are now pointing to a strong finish to the season.”

This season has been a coming out of sorts for online retail. Since comScore began tracking e-commerce spending in 2001, seven individual shopping days have surpassed $1 billion in spending. Six of those days occurred this year. To date, Cyber Monday 2011 (Nov. 28) ranks as the heaviest online spending day in history at $1.25 billion. Leading off this most recent week of the holiday season, December 5, now ranks as the second heaviest spending day in history at $1.18 billion, followed by November 29 at $1.12 billion, and December 6 at $1.11 billion. Cyber Monday 2010 (Monday, November 29, 2010) rounds out the top five at $1.03 billion.

Retail e-commerce spending for the first 39 days of the November – December 2011 holiday season has reached $24.6 billion, a 15-percent increase versus the corresponding days last year.

A Record-Setting Week for Online Holiday Sales

Online sales for the first full week of what is considered the true holiday shopping season grew 15 percent to a record $5.96 billion, according to comScore, a firm that measures digital data.

The week from November 28 (“Cyber Monday”) to December 2 had three individual days that saw more than $1 billion in online spending, led by Cyber Monday, which was the heaviest online spending day on record at $1.25 billion. November 29 reached $1.12 billion and November 30 reached $1.03 billion. These three billion dollar spending days currently rank as three of the four heaviest online spending days in history.

For the holiday season-to-date (November 1 – December 2 as measured by the Reston, Va.-based company), $18.7 billion has been spent online, a 15-percent increase versus the corresponding days last year.

“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—before promotional offers and spending intensity pick back up in earnest around mid-December,” said comScore chairman Gian Fulgoni.

One of the most prevalent holiday season promotions used by online retailers is free shipping, which typically peaks around the Cyber Monday period. More than half of all transactions have included free shipping with rates increasing later into the season, comScore said. The week of Thanksgiving (week ending Nov. 27) saw free shipping occur on 64.4 percent of transactions, while this past week maintained a similar level at 63.2 percent. In each case, these rates were approximately 10 percentage points higher than last year.

“Free shipping is one of the most important incentives that online retailers must provide during the holiday season to ensure that shoppers will convert into buyers,” Fulgoni said.

More than one-third of respondents (36 percent) indicated that free shipping was “very important” and that they would not make a purchase without it, according to comScore’s annual holiday shopping survey. An additional 42 percent said that free shipping was “somewhat important” and that they actively seek out free shipping deals. Only 15 percent of respondents indicated that free shipping was not particularly influential in their purchase decision.

Cyber Monday is a marketing term created in 2005 by online retailers after learning that online shopping activity increased the Monday following Black Friday.

Holiday Jewelry Sales Up 8.4%, Luxury Sales Up 6.7%, Total Holiday Sales Up 5.5%

After a mild start, jewelry posted several weekly sales increases and ended the 2010 holiday shopping season with a year-over-year increase 8.4 percent, according to MasterCard Advisors’ SpendingPulse. Meanwhile, luxury sales (excluding jewelry) started the season with a solid gain and then picked up steam, ending with a very respectable year-over-year growth of 6.7 percent.

During the 50-day period (from November 5 till December 24), the data showed overall year-over-year growth of 5.5 percent, excluding auto sales.

“If last year’s holiday story was about gaining some stability, this year’s is about getting back to growth,” said Michael McNamara, vice president, Research and Analysis for SpendingPulse. “The 2010 holiday period is categorized by strong year-over-year growth in apparel and continued strength in e-commerce. We also saw a noticeable return in spending in the larger ticket items, as exemplified by the solid growth in jewelry, luxury and even the furniture category.”

McNamara said the momentum in 2010 holiday season spending appears to have started as early as the second week of November, producing a month of solid growth and persisting through the traditional early December lull.

“The cold weather across much of the country in December appeared to be a positive for the apparel sector,” McNamara said. “While there was some disruptive weather in the Midwest and the west coast toward the end of the season, the conditions did not seem to negatively impact the national sales momentum. In some cases the weather may have also benefited the e-commerce channel.”

As with last year’s holiday season, e-commerce was the big winner this year, with seasonal sales up 15.4 percent. With online sales representing significant share of sector sales in areas such as apparel, the double-digit growth rates are becoming more meaningful.

Apparel sales for the season saw a year-over-year increase of 11.2 percent, according to SpendingPulse, with menswear posting a 10.5 percent year-over-year increase and women’s apparel up 5.6 percent, making for one of the best periods of growth in this subcategory since the financial market turmoil in 2008, according to SpendingPulse. For the 2009 holiday season, apparel sales were down by 0.4 percent.

Meanwhile, it was electronics sales that lagged this holiday season with a year-over-year sales increase of 1.2 percent, due primarily to the decline in TV prices.

A macroeconomic indicator, SpendingPulse reports on national retail and services sales and is based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates for all other payment forms, including cash and check. SpendingPulse is provided by MasterCard Advisors, the professional services arm of MasterCard Worldwide.

Holiday Jewelry, Luxury Sales Show Continued Strength

Reuters

Jewelry sales for the holiday season have increased 2.6 percent year-over-year, according to MasterCard Advisors’ SpendingPulse, which tracks national retail and services sales. Luxury sales, excluding jewelry, are doing slightly better at 2.8 percent.

Jewelry sales have grown steadily in the latter part of the season, according to the report, which tracks sales from October 31 to December 11. Overall, retail sales are generally up with some exceptions, most notably electronics.

“The modest growth we first saw with the August Back-to-School season has accelerated. These results suggest that retail spending continues to gain traction,” said Michael McNamara, MasterCard Advisors SpendingPulse vice president. “Most sectors are showing steady improvements, with Electronics, Department Stores and Furnishings categories recording flat to small declines. The solid November growth rates have continued across most areas through the first half of December.”

In addition to jewelry and luxury, SpendingPulse, which uses card swipe data from MasterCard and estimates of other payment methods, analyzed the Electronics, Apparel and eCommerce sectors. Here are the midseason highlights:

eCommerce
eCommerce continues to be one of the stars of the season with a season-to-date growth rate of 13.5 percent. The sector has been showing double-digit weekly year-over-year growth rates since the second week in November.

Apparel
The Total Apparel category was up 9.8 percent for the season-to-date. Women's Apparel sales were up 4.4 percent for the season with the category recording a slightly better showing since Black Friday. Men's Apparel sales grew 8.4 percent year-over-year. Growth within the Teen and Family Apparel segments is also strong.

Electronics
Electronics sales fell below 2009 levels during the three weeks leading up to Black Friday. Sales during the rest of the period barely made up the decline, with sales season-to-date recording a 0.4 percent increase over last year.

Cyber Monday Sales Surpass $1 Billion

Spending on Cyber Monday (November 29), the e-commerce equivalent of Black Friday, reached $1.028 billion, up 16 percent year-over-year, representing the heaviest online spending day in history and the first to surpass the billion-dollar threshold, according to comScore. For the November – December 2010 holiday season to date (November 1-29), $13.55 billion has been spent online, a 13-percent increase versus the corresponding days the prior year. The figures do not include spending on travel.

“The online holiday shopping season has clearly gotten off to a very strong start, which is welcome news,” said Gian Fulgoni, chairman of the Reston, Va.-based company which measures digital data. “At the same time, it’s important to note that some of the early strength in consumer spending is almost certainly the result of retailers’ heavier-than-normal promotional and discounting activity at this early point in the season. So, while we anticipate that there will be more billion-dollar spending days ahead as we get deeper into the season, only time will tell if overall consumer online spending remains at the elevated levels we’ve seen thus far.”

Cyber Monday’s growth in sales was driven primarily by an increase in average spending per buyer (up 12 percent) while the number of buyers on Cyber Monday grew by a lower 4 percent to 9 million, the company said. The average spending per transaction grew 10 percent to $60.05, while the total number of transactions increased 6 percent to 17.1 million.

Nearly half of dollars spent online at U.S. Web sites originated from work computers (48.9 percent), representing a decline of 3.8 percentage points from last year. Buying from home comprised the majority of the remaining share (45.4 percent) while buying at U.S. Web sites from international locations accounted for 5.8 percent of sales.

“While online shopping from work originally occurred to take advantage of broadband speeds that people lacked at home, it was widely believed that this would decline markedly as home broadband connectivity increased,” Fulgoni said. The fact that spending from work remains so prevalent suggests other explanations. It is more likely that consumers continue to shop from work primarily because by doing so they are able to shop for holiday gifts while minimizing the risk that their children, spouses and significant others might see what Santa will bring .”

Cyber Monday is a marketing term created by Shop.org, an association of digital retailers, to encourage consumers to shop online. It is held on the first Monday following Black Friday.