E-Commerce Will Grow Again This Holiday, but Don’t Thank Mobile or Social

Online shopping should be a bright spot during the holidays this year, with sales expected to grow by 20 percent compared to 2011.

But it’s not what you may think. Sales are forecast to increase because there are two additional days between Thanksgiving and Christmas this year, giving consumers more time to shop than they had last year.

That was the conclusion of a 15-page report written by analysts at Citi Research.

What’s more, the report said that retailers will see very little impact from people making purchases on mobile devices like phones and tablets, or on social media sites like Facebook or Pinterest, even though there’s a lot of hype surrounding those two areas. “While mobile and social will likely grab headlines this season, retailers should concentrate on their ‘core technologies,’ namely e-commerce nuts and bolts, and strategies that integrate their traditional stores [with online ordering and in-store pick-up],” concludes the report.

The document, which was distributed to Wall Street investors, includes data from several key industry sources, including Shop.org’s holiday outlook, ChannelAdvisor’s holiday outlook and information from Retail Systems Research.

Overall, it finds that online spending is expected to increase by 20 percent this year, which is slightly less than what the industry experienced in 2011 when it reported growth of 23 percent. In general, e-commerce continues to see significant gains as spending shifts from offline to online. Mary Meeker, a partner at Kleiner Perkins, noted in a report last year that e-commerce in the U.S. was making up only 8 percent of overall retail.

While it indeed takes a lot for companies such as Amazon, eBay and Walmart to see an impact from changes, consumers are shifting their behavior to mobile and social, although probably not as fast as investors would like to see.

EBay is one of the most vocal companies in breaking out the impact of mobile. It told AllThingsD recently that its mobile applications have now been downloaded 100 million times. Furthermore, it is projecting sales on mobile devices to hit $10 billion, which is double what it did last year. That roughly pencils out to 16 percent of the company’s revenue, if you base the calculation off of last year’s gross merchandise volume.

In contrast, Citi cites data from Forrester Research that says smartphones will account for 3 percent of e-commerce this year, increasing to 7 percent in 2016.

Social commerce is less mature, although that’s starting to change, too. According to research conducted by Monetate, which helps Best Buy, Urban Outfitters and other clients market their Web sites, Pinterest came out of nowhere over the past year to become one of the most significant drivers of social traffic to e-commerce. In the first quarter of 2012, Facebook made up 60 percent of the social traffic to retailers, while Pinterest made up 26 percent; by the holidays, it could surpass both Facebook and Twitter.

Citi’s report quoted specific data from Booz & Co. that suggests that revenue from physical goods sold on social networks will grow by 93 percent per year in the U.S., reaching $14 billion by 2015.

Citi’s biggest piece of advice for retailers is to provide as many choices to consumers as possible. For instance, users should be able to order online and pick up items in the store; retailers should have their databases synced so that they see the same prices in the store as they do online. Perhaps one of the most surprising nuggets was that brick-and-mortar retailers shouldn’t necessarily be losing out this holiday — after all, 90 percent or more of sales still occur offline.


Latest Video

View all videos »

Search »

First the NSA came for, well, jeez pretty much everybody’s data at this point, and I said nothing because wait how does this joke work

— Parker Higgins via Twitter