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Online holiday shopping booms

November 24, 1998
Web posted at: 6:15 PM EST

by Maryann Jones Thompson

(IDG) -- Web retailers can expect a joyful holiday season. According to industry analysts, Internet stores should bring in more than $2 billion in sales – over two times last year's revenue.

"It's momentum," says Kate Delhagen, director of the online retail group at Forrester. "It's a combination of more people plus more retailers plus more products – the classic retail formula."
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Consumers are also more comfortable with the e-commerce experience. "Buying online is no longer the exception," says Delhagen. "It's one of the most common things people do online, particularly at the holiday season, when people are in the gift-buying frame of mind."

However, even with such rosy forecasts, the Internet is still a blip on the retail world's radar. "It's a drop in the bucket compared to the overall spending for Christmas," says Melissa Bane, program manager at the Yankee Group. The National Retail Federation predicts Americans will spend approximately $172 billion to $174 billion this season. Even the most aggressive Web sales forecast – Forrester's $3.5 billion – gives online retailers only 2 percent of all holiday spending.

The holidays should mean more than just a sales spike to digital retailers. For the industry to prove it has more potential than a new catalog channel, it needs to leverage interactive technologies to build loyalty among current shoppers and cultivate new ones.

"The main hurdle for online retailers is trying to figure out how to cull enough value out of the customers they've already acquired to achieve profitability and return on investment," says Nicole Vanderbilt, group director of digital commerce at Jupiter Communications, whose studies show that neither consumers nor digital retailers have taken advantage of the online gift market. "We've only seen the very beginnings of an understanding of this from the online industry."

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