Online transactions shrink this holiday season

December 8, 2008

Online transactions shrink this holiday season The average dollar amount of online purchases made this holiday season is down 12 percent since the same time last year. This signals that retailers are having to offer deep discounts in order to eke out modest sales gains in the 2008 holiday shopping season.

Total online sales this holiday season are up a modest one percent over the same period last year. Many see this as a promising sign that the recession isn’t affecting the individual consumer that greatly.

However, the average value of each online transaction has dropped considerably this year. The average Cyber-Monday transaction was valued at $51.62 in 2008 as opposed to $58.81 in 2007.

The difference of $7.19 per individual transaction may not seem like much, but for retailers the difference can definitely add up. However, it’s not quite clear whether shoppers are seeking lower prices or if the difference is due to retailers offering deeper discounts on their products.

Some of the differences in spending patterns from last year could also be caused by consumers shifting to the Web from brick and mortar stores. If shoppers are making fewer stops, they may be more likely to pick up smaller accessories online in addition to major purchases.

In fact, online sales seem to be holding up much better than overall retail sales numbers. Big box retailers saw a 2.7 percent fall in same-store sales this November, the worst in 39 years.

It’s likely that retailers will have to continue offering deep discounts to attract customers this year. Unfortunately that means a much narrower margin for the retailers at the end of the season.

While it will be weeks before we see the overall results of the holiday shopping season, the numbers aren’t likely to be very compelling. However we could actually see online retailers fare better in a rocky economy than their offline counterparts.

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