Online retailers offer promotions, discounts

~ Analysts said American consumers are expected to spend $33 billion online this holiday season.

NEW YORK -- As consumers hold tight to their wallets, online retailers will work harder this year for their share of the holiday gift list.

With a holiday season that is expected to be the weakest since 2002, and numbers of new online customers leveling off, more Web retailers have been pushing special offers and promotions to draw consumers.

As the online holiday shopping season officially kicks off Monday, a number of retailers are hosting one-day sales or special offers for the occasion. The Monday after Thanksgiving, tagged "Cyber Monday" by the National Retail Federation, marks the first big online shopping surge for many merchants, as consumers go back to their work computers.

Toys "R" Us Inc. will hold a one-day online sale and rival eToys.com will launch a two-day sale. Wal-Mart Stores Inc. will begin five days of online-only sales.

Online jeweler Blue Nile Inc. will give customers 20 percent off purchases paid through PayPal, eBay Inc.'s electronic payment division. Target Corp., Circuit City Stores Inc., Sears Holdings Corp., Crate & Barrel, the Discovery Store and Overstock.com Inc. are among dozens of retailers offering free shipping that day.

More competitive

"The online community is getting more competitive as the amount of new customers slows," according to Scott Silverman, executive director of Shop.org, an online arm of the National Retail Federation. "Add to that the concerns about the economy, and promotions and sales provide a great way to get people excited."

Silverman said the number of retailers offering free shipping with no conditions, such as a minimum purchase, has jumped to 41.4 percent from 36 percent last year.

Nearly one-third of retailers are having special one-day sales for Cyber Monday, according to the NRF's annual survey. The number of retailers planning some type of special promotion for the Monday after Thanksgiving has surged to 72 percent of those polled from 42 percent just two years ago.

As people trickle back to the office after the holiday weekend, another NRF survey polling shoppers online reports that more than half of adults plan to shop at work. How much they will ultimately spend is the real question.

A survey by Nielsen Online forecasts most respondents will spend the same share of their gift budget online as in 2006, which could be bad news for e-tailers.

"The fact that consumers expect to allocate the same share of what may be a shrinking overall holiday budget to the Web suggests that online sales growth might not live up to the 20 percent annual growth rates we have seen in years past," Ken Cassar, vice president of industry solutions for Nielsen Online, said in a written statement.

Sales off to good start

Analysts at Forrester Research said American consumers are expected to spend $33 billion online this holiday season, up 21 percent from a year ago. This is a slightly slower growth rate than the 23 percent seen last year.

Online sales got off to a good start, according to one research firm. ComScore Networks, which tracks Internet spending, reported Sunday that online sales, excluding travel, auctions and corporate purchases, rose 22 percent to $531 million on the day after Thanksgiving versus the same day a year ago. ComScore expected online sales Monday to exceed $700 million.

Still, some consumers said they expect to reduce their holiday spending because of higher costs.

Karen Dolinsky, of Cobleskill, N.Y., said gas prices will probably lead her to spend less this year. But regardless of how much she spends, Dolinsky, 44, said she would be doing the majority of her shopping on the Web.

"I pick one day to go to the mall and then the rest is done online," she said.

Sarah Caterina, 32, of Burlington, Vt., said she took advantage of online perks and completed all her Christmas shopping on the Internet.

"I did everything online. I had a budget in my mind, free shipping for everything," she said.

Caterina said online shopping also makes her shop more sensibly.

"I stuck with a budget. I wasn't in the store. If I pick stuff up, I'm like, 'Oh, I have to have this, my kids will love this.'"

But whatever the reason consumers choose to shop online, retailers are planning to push some promotions through the holidays.

L.L. Bean launched free shipping without a minimum purchase this holiday season and will also offer select online-only sale items through the holidays.

Free and premium shipping offers are popular this year. Blue Nile recently unveiled free FedEx priority overnight shipping, and Shoebuy.com launched a "Quick Ship Items" feature that ships selected gift items for free via UPS ground the same day if ordered before 4 p.m.

Stepping up convenience

At Amazon.com Inc., spokesman Craig Berman said the retailer is stepping up convenience measures for the holiday season -- including 99-cent gift wrap -- in addition to free "Super Saver Shipping" on most orders of $25 or more.

The retailer also has a membership program -- Amazon Prime -- that offers free two-day shipping on unlimited orders for a fee of $79 a year.

And at endless.com, Amazon's shoe site that launched last December, the company offers "Negative $5" overnight shipping -- free shipping with an additional $5 off a customer's total order when shipped overnight.

Silverman said it's incentives like these that help make online shopping more appealing to traditional "brick-and-mortar" shoppers.

"Online has so much going for it because of the convenience, and then when you make shipping free there is no longer a trade off," he said.