'Cyber Monday' a Big Hit Again

The full third quarter 2009 Retail e-Commerce Sales Report is available at www.census.gov/retail/mrts/www/data/html/09Q3.html.

Cyber Monday, three days after Black Friday (the traditional start of the holiday shopping season for bricks-and-mortar retail outlets), was its usual hit with e-tailers in 2009 ' in fact, the largest yet in terms of sales. Comprehensive final sales figures weren't available by press time, but it appears that online shopping at the start of the holiday season was up at least 5% over 2008.

According to Internet-use research firm comScore, online holiday shoppers rang up $16 billion from Nov. 1 through Dec. 6, with Cyber Monday '09 itself (Nov. 30) accounting for $887 million, up 3% from Cyber Monday 2008 ' although overall traffic may have been down from the previous year (Internet data-rating outfit Experian Hitwise reports that overall Cyber Monday activity was down 9% in the United States compared to the same day in 2008).

Free shipping was a big draw for Internet shoppers, according to several organizations that monitor online commerce. The National Retail Federation (“NRF”), for example, says that about 79% of online retailers offered free shipping if customers purchased a certain dollar amount of merchandise, and 57% would ship for free without spending conditions imposed on shoppers.

Changing Patterns

“With more people shopping on Cyber Monday this year and an increasing number of retailers offering promotions, this was the largest ' and most important ' Cyber Monday yet,” Scott Silverman, executive director of Shop.org, the NRF's digital division, says. “Since retailers began highlighting Cyber Monday promotions five years ago, Americans' spending patterns have changed. More families have high-speed [I]nternet access at home and don't need to rely on their work computers to make holiday purchases, which makes the early morning and evening hours crucial for retail sales.”

A recent NRF survey indicated that 33.1% of holiday shoppers would spend more shopping on the Internet this holiday season precisely because they would not have to pay for shipping if they did so.

“In this economy, shoppers are taking a look at the entire purchase price ' including shipping ' before deciding where to shop,” says Phil Rist, executive vice president, strategic initiatives, of Internet-marketing and data-research firm BIGresearch, in Worthington, OH. “Though free shipping isn't 'free' for retailers, companies know these promotions can set themselves apart from their competition and are relying on them more heavily to bring in shoppers.”

Even shoppers who may not have been online on Cyber Monday were still able to find free shipping, the NRF says: Most retailers would end free and guaranteed holiday shipping from Web site buys on Dec. 18, but 54.2% of the 70 major retailers surveyed said they would offer overnight shipping (not necessarily free) options for delivery by Christmas through Dec. 23.

The NRF coined the term Cyber Monday in 2005. The day has since taken on significance for online sellers similar to that of Black Friday for bricks-and-mortar merchants as a day to decorate retail-outlet and corporate ledgers with black ink instead of red.

Still, while consumers flocked to the Internet on Cyber Monday '09 ' comScore estimated that retailing sites were peppered with up to four million hits a minute from North American cybershoppers for the first several hours of the day ' it appeared that cyber infrastructure remains lacking, with many sites, including those of major retailers, experiencing page-load times of five to 10 times slower than normal. Several big-name retailers' sites jammed or crashed, and were out of service at some time on Nov. 30, according to San Mateo, CA-based mobile and Internet-trend research firm Keynote. These included Victoria's Secret, J Crew, Neiman Marcus and Saks Fifth Avenue; Web sites for each were down for an hour on Cyber Monday, while the Kohl's site was down for two hours.

“Interestingly, Cyber Monday was much worse for sites than Black Friday, staying true to its name,” Keynote's Ben Rushlo, director of competitive research, says. “More users, shopping online, brought sites that were relatively stable on Black Friday to their knees on Cyber Monday. In every vertical Keynote measure (apparel, books and music and electronics), at least one site had what would be classified as a 'meltdown.' In total, six of the measured sites crumbled during some part of the day (some for the entire day). Another nine sites had major slowdowns or periods of instability during the day. All of the sites reporting issues are major destinations for online shopping and it is very surprising ' given what has happened in years past and all the time retail sites have had to prepare. Given the importance of the Internet and its maturity, it is inexcusable that sites would be impacted this significantly. It is not as if Cyber Monday can take you by surprise.”

Certainly, IT workers at e-tailers' Web sites, and the online portals and pages of bricks-and-mortar sellers, have their work cut out for them, as may counsel who could be busy tightening ' or loosening ' language guaranteeing performance, access to online inventory, availability, viewability and delivery guarantees.

Rushlo points out that big players such as Wal-Mart, Sears, Newegg, Best Buy, Apple and Toys R Us “performed very well on Cyber Monday.”

What Brought Shoppers To Internet Stores?

A Nov. 29 survey for Shop.org conducted by BIGresearch showed that 96.5 million U.S. residents said they planned to shop online during the holiday season. e-Tailers offered several enticements, such as:

• Deals on specific items;
• Low-dollar (or no-dollar) thresholds for free shipping;
• One-hour sales;
• Targeted Cyber Monday e-mails to consumers registered with particular companies and Web sites;
• Club memberships for online purchases; and
• By-Christmas delivery guarantees.

Shop.org found that 87.1% of retailers planned a Cyber Monday special promotion ' a jump from 83.7% in 2008, and 72.2% in 2007.

Experian Hitwise ranked Amazon as the most-visited Web site on Cyber Monday '09, taking an estimated 15.5% of hits among the top 500 online retailers. It was the fourth consecutive year that Amazon was the top-visited site.

The site with the biggest Cyber Monday visit increase over the same day in 2008 was Staples, with 61%; Barnes & Noble was next with a 44% increase among the top 20 gainers, according to Experian. The biggest downturns occurred for Overstock.com and Home Depot, with Web-visit decreases of 25% and 20%, respectively, according to Experian.

Changing Behaviors and Reasons for It

One consumer-behavior shift seen on Cyber Monday that may reflect companies' clamping down on employee “idle time” during a recession was that consumers seemed to do the majority of their online shopping from home in the morning and the evening, instead of over lunch at the office.

A Shop.org survey indicated that an estimated 91.5% of Cyber Monday shoppers ' 88.2 million Americans ' would shop from home on Cyber Monday, while 13.5% ' 13 million people ' would shop from work. A Shop.org/BIGresearch survey estimated that 69 million Americans would shop from work at some point during the holiday season, but the shift seen was that most people shopped in the early morning and the early evening, and not at work.

According to the survey, 41.5% of Cyber Monday shoppers planned to hit the Web early in the morning, with nearly as many (38%) planning to shop late morning.

BIGresearch's Phil Rist echoes Shop.org's Silverman, surmising that: “As the number of Americans with high-speed [I]nternet at home increases, fewer people feel the need to shop online from work. While many companies don't mind employees shopping online over their lunch hours, high unemployment and concerns over job security may cause more people to shop this Cyber Monday from the comforts of their own home.”

Also, 3.8% of Cyber Monday shoppers were expected to shop online from a mobile device ' iPhone or BlackBerry ' while some shoppers (1.5%) indicated they would shop from a location other than home or work ' or a store ' such as a coffee shop or friend's house.

Shop.org's Silverman predicted a surge on Dec. 14, when offers of guaranteed shipping by Christmas started to expire. He said that “companies are taking lessons-learned from Cyber Monday and planning to implement minor changes over the few weeks [following].”

Shop.org has a vested interest in the sales day. It's portal, CyberMonday.com, includes promotions and savings from more than 700 retailers, something of which it makes no secret. The organization says that 15.8 million visits were made to the site on Nov. 30, which it says was a hike of 8% from Cyber Monday 2008. The most traffic ' 1.2 million hits ' came from 9 a.m. to 10 a.m. EST, according to Mall Networks, which runs the site. Shop.org says site traffic grew 19% from 2008 from 5 p.m. EST to midnight, another indicator that more people shopped from home last year than in 2008.

Overall Third Quarter e-Commerce Stats

Overall indicators on the effects of Cyber Monday may be seen in the fourth quarter e-commerce report from the U.S. Census Bureau, which will be released on Feb. 16. The third quarter report showed that amidst encouraging reports that the two-year-long recession that has brought national unemployment to about 10%, housing-construction starts to a limp, and minor and major retailers alike to their knees, the flame of e-commerce burned 4.5% hotter in the third quarter than in the second, the Bureau reports.

In fact, the government and other economic monitors say that the general improvement, albeit slow, in the national economy helped bring e-commerce spending up along with estimated total retail activity ' with total estimated retail spending, adjusted for seasonal variation, but not for price changes, to the ring of $922.2 billion for the third quarter, itself an increase of 1.7% ('0.2%) from the second quarter, when spending nearly dipped below $900 billion.

e-Commerce estimated retailing for the third quarter came to $34 billion, which represented 3.7% of all estimated retail spending for the quarter, the Census Bureau says. That's a tenth of a percent above e-commerce as a percentage of all spending in the second quarter.

The Bureau says that the third-quarter 2009 e-commerce estimate increased 1.8% ('1.9%) from the third quarter of 2008, while total retail sales decreased 7.5% ('0.4%) in the same period. The Census Bureau notes that in the case of the third-quarter 2009 e-commerce estimated increase of 1.8% from the same quarter in 2008, the so-called “90% confidence interval” includes zero (90% of the time the figures are calculated), which means that Bureau statisticians don't have enough information to conclude that the change is more or less than zero.

Historically, the strength of e-commerce has been a bulging economic muscle. In the 40 quarters that the Census Bureau has estimated e-commerce spending, quarterly estimated total e-commerce activity as a percentage of all estimated retail spending has increased 31 times; the other times, it was level from quarter to quarter ' but it has never fallen, even though some increases, such as this third quarter over the second quarter, have been modest.

Likewise, total e-commerce spending since 1999 has fallen below the previous quarter only twice.

Not adjusted for seasonal variation but or price changes, estimated U.S. retail e-commerce sales for the third quarter of 2009 totaled $32 billion, an increase from the second quarter that the Census Bureau tallies at 3.9% ('1.2%).

Also on an unadjusted basis, the third quarter 2009 e-commerce estimate increased 2.1% ('1.9%) from the third quarter of 2008, while total retail sales decreased 7.8% ('0.4%) in the same period.

Although business lawyers represent many e-commerce business-to-consumer establishments, the components of that sector, retailing and selected services, account for only about 4% of U.S. e-commerce, according to the Census Bureau. Business-to-Business (“B2B”) e-commerce is the largest segment of the e-commerce market, accounting for about 93% of all U.S. e-commerce.

How the Census Bureau Defines e-Commerce

The Census Bureau classifies e-commerce sales as any involving goods and services for which a buyer places an order, or for which price and terms of sale are negotiated, over the Internet, an extranet, an electronic data interchange (“EDI”) network (this is the leading method), e-mail or other online system. Payment needn't be made online for the transaction to count as e-commerce.

Latest e-Commerce Total and Sector Report

Last May, the Census Bureau released its E-Commerce 2007 report. The Bureau's compilations of e-commerce activity typically lag a year after the reported year so that data can be analyzed, and a report, with accurate, meaningful statistics, can be prepared and released. 2007 is the latest of the surveys.

The report had good news for the general e-commerce sector, and for particular sectors, such as law, for 2007.

Overall, e-commerce grew faster than all economic activity in three of the four major sectors the Bureau's E-Stats report covers, with only merchant wholesaling down slightly.

The Census Bureau notes that the change in each sector from traditional to e-supported shipments, sales or revenues remained gradual.

Total e-commerce retail transactions in 2007 came to nearly $127 billion (3.2% of total retail sales), the Bureau says, up 3.2% from the $107 billion in 2006 (2.8% of total retail sales).

Also again, manufacturers and merchant wholesalers were the heaviest users of e-commerce, and manufacturers raised the pace at which they use e-means more quickly than did retailers or selected service businesses.