News / Economy

'Cyber Monday' Sales Set to Hit Record as Mobile Grows

FILE - Packages that are ready to ship move along a conveyor belt at the Amazon.com 1.2 million-square-foot fulfillment center in Phoenix, Arizona,  Nov. 26, 2012.
FILE - Packages that are ready to ship move along a conveyor belt at the Amazon.com 1.2 million-square-foot fulfillment center in Phoenix, Arizona, Nov. 26, 2012.
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Reuters
— U.S. online sales are expected to hit $2 billion on “Cyber Monday,” for the first time since the data firm comScore began tracking such information.
 
Monday's 20 percent increase is expected to come even after many consumers shopped earlier because retailers began offering online discounts on Sunday to compete with each other and online retail giant Amazon.com Inc.
 
As of 6 p.m. EST (2300 GMT), online sales were up 17.5 percent on “Cyber Monday,” according to IBM Digital Analytics Benchmark.
 
“All of them are behind Amazon, but some are starting to catch up,” said Edward Jones analyst Brian Yarbrough, said of bricks-and-mortar retailer, but gave Macy's Inc and Wal-Mart Stores Inc good grades for their e-commerce operations.
 
E-commerce now accounts for roughly 10 percent of retail spending in the United States. However, it is growing much faster than sales at bricks-and-mortar stores as shoppers seek low prices, convenience, faster shipping and wider selection. Cyber Monday is the busiest day of the year for online sales.
 
U.S. shoppers spent almost three percent less overall than they did a year earlier during the Thanksgiving weekend, according to the National Retail Federation data. But online sales rose 17.3 percent on Thanksgiving and Black Friday, outpacing sales growth at brick-and-mortar stores, data from comScore Inc  showed.
 
It is too soon to know which retailers are winning, but a fuller picture will emerge on Thursday when some stores report monthly same store sales.
 
On Monday, the S&P Retail Index finished the day down 0.7 percent. Macy's Inc. shares fell 1.5 percent, while J.C. Penney Co. Inc. was down 1.8 percent and Target Corp. down 1.9 percent. EBay Inc. was up 1.6 percent, while Gap Inc. rose up 1.5 percent.
 
Electronics were again the top seller on Cyber Monday.
 
Walmart.com CEO Joel Anderson said the retailer has run out of Sony Corp PS4 and and Microsoft Corp's XBox consoles, as had Target Corp., but both chains expected fresh supplies.
 
PriceGrabber, a price comparison website, said that as of Monday afternoon, Samsung's Galaxy Tab tablet was the most sought after item. Over the weekend, the most common searches were for Apple Inc.'s iPad and iPad Mini tablets.
 
Growing Importance of Mobile
 
A big source of online shopping growth this holiday season has come from increased use of smart phones, which enable consumers buy online with tablets or in-stores with their phones.
 
According to IBM, mobile sales accounted for 15.6 percent of online sales as of Monday at 6 p.m. (2300 GMT) compared to 13 percent on Cyber Monday in 2012.
 
“Consumers really seem to like the ease of shopping on the go. They have been browsing with their smartphones and buying with their tablet devices,” said Jay Henderson, Strategy Director for IBM.
 
Walmart.com's Anderson said mobile shopping accounted for 55 percent of its traffic. Blue Nile Inc. Chief Executive Harvey Kanter told Reuters that 60 percent of visits to its web site and 25 percent of sales were made on a mobile device during the weekend.
 
But many retailers' websites are better suited to laptops than to phones or tablets, noted Forrester Research analyst Sucharita Mulpuru. “There's still work to do.”
 
United Parcel Service Inc. expected to ship 32 million packages on Monday, one million more than last year, said Alan Gershenhorn, the company's chief sales, marketing, and strategy officer.
 
He said a larger proportion of online shipments are originating at retail stores rather than distribution centers, which speeds delivery and enables retailers to use unsold merchandise to fill e-commerce orders.
 
The growth of e-commerce, however, comes at a cost. Consumers have begun to expect free shipping and more retailers are feeling the impact on their bottom line as they try to keep up with Amazon's Prime program, which offers free two-day shipping for an annual fee.
 
Last month, Macy's said higher shipping costs was hitting its profit margins.
 
While most in-store sales now occur after a consumer has done research beforehand on a retail website, consumers are visiting fewer retailers when they go shopping.
 
“Instead of going store to store, they're going online, figuring out what they want, and where they need to go. So that's impacting traffic,” said Bill Martin, founder of ShopperTrak, a firm that measures store traffic.
 
That means that retailers with user-friendly websites that take advantage of bricks and mortar for delivery will benefit from the e-commerce growth.
 
Some analysts praise Macy's, Best Buy Co. Inc.  Nordstrom and Gap Inc. for blending their stores and their e-commerce to keep customers.
 
“They have to go hand and hand now - that's just how the shopper shops today,” said Ron Friedman, retail practice leader at the consulting firm Marcum LLP.

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