ONLINE HOLIDAY SALES WILL REACH $26 BILLION IN THE U.S

Jupiter Research: 2005 online holiday sales will reach $26 billion in the United States, an 18% increase over 2004. Also indicate that online retailers will experience reduced margins. Retailers will be plagued by higher fuel surcharges on order shipments while feeling compelled to offer free shipping in order to capture sales equal to last year and stem attrition to competitors who are offering free shipping. Channel adoption is driving the projected increase in online retail sales during the upcoming holiday season and macroeconomics are driving the reduced margins for the retailers. While the expected sales increase for retailers is significant, consumers are feeling pinched by expensive energy prices. They will respond to free shipping offers, but, these offers will not be enough to encourage them to spend more than last year. 56% of consumers who intend to purchase online this holiday season do say free shipping is more important this year because of high fuel and gas prices. However, there is no indication that customers who plan to buy online this holiday season will be any more motivated to increase their spending by free shipping offers. While the Internet continues its maturation as an online shopping channel, external macroeconomic events may have a greater impact on sales growth, potentially even more significantly at the critical holiday season. For all of 2005, U.S. online retail sales are on target to reach $79 billion versus $66 billion in 2004

. Holiday 2005 Forecast: Addressing The Impact of Macro-Economic Factors on Holiday Online Retail Sales Publ. 20051101