Consumers are expected to continue shifting their gift buying online this holiday season, citing convenience, time saving and price among the primary reasons for shopping on the Web, according to Nielsen Online.
With the current economic downturn, there is an increased focus on price this year, with 53 percent of consumers citing price as a reason to buy online, compared with 46 percent last year.
At the same time, consumers continue to trump convenience more than price as the primary value of the channel, with 76 percent of consumers citing the ability to shop 24 hours a day and 74 percent citing time saving for why they shop online.
These results are from a Nielsen Online pre-holiday survey intended to gauge online consumers' holiday shopping plans for 2008. The online survey was fielded from November 6-11 among approximately 1,300 online shoppers in the U.S. who did holiday shopping online last year and/or planned to do so this year.
"Based on our survey findings, we believe holiday online sales will grow from 2007, but likely at a single-digit rate and representing the smallest increase we've seen since the online commerce market was born," said Ken Cassar, vice president of industry insights, Nielsen Online.
Because of projected low growth, online merchants may offer more discounts than in years past. Traditionally, online retailers have offered discounts but not to the same degree as the bricks and mortar stores, and in the past some online stores have waited until after Christmas to offer sales.
"In this environment, the online stores are going to have to discount up front to attract people to buy," said Robert Ballenger, an e-commerce expert at Washington and Lee University.
Ballenger says this is already beginning to happen. Online retailers, he says, are becoming very competitive on discounting.
"I think anyone who has shopped online or through a catalog in the past year or two is going to be inundated this year with e-mail solicitations offering discount coupons to encourage them to buy online," Ballenger predicted.
Also this year, many online retailers are offering free or reduced shipping. For example E-bay is strongly encouraging its bigger sellers to offer free shipping by discounting its seller fees to those who offer free shipping.
Online retailers do have one disadvantage, says Ballenger: they can't handle the last minute buyer. About five days to a week before Christmas online buying drops dramatically, because regular shipping won't get the goods to customers on time and few people want to pay for express shipping.
At this point, the retail stores, if they have the inventory, can precipitously drop their prices to attract customers.
"I think there are going to be a lot of people this year who are going to wait for those prices to drop," says Ballenger. "I remember this happened in the early 1990s. Many Christmas shoppers waited because they knew there were going to be big discounts in the last week, and they were right. And that's not good for retailers at all."
