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Diamond Online Holiday Sales: It's Crystal Ball Time.
Doug Schwegman, Market Research Director for Cybersource, a leading Credit Card Processor for Online Merchants is the first e-commerce analyst to open his crystal ball and prognosticate on whither Holiday on-line sales are going.
Last year the U.S. Dept. of Commerce reported that online sales by U.S. retailers grew 23.9% in the fourth quarter. So what is the growth outlook for 2005 holiday sales? As of mid October, only a few forecasts of online retail sales for the upcoming holiday season have been published (see table below). Those estimates range from 22% to 26%.
So far in 2005, online retail sales have turned in a solid performance according to U.S. Dept. of Commerce data. Year-over-year Q1 growth was 23.3% and that accelerated to 26% in Q2. Third quarter data will not be available until November 22nd but merchant performance indicates that third quarter growth will be similar to that of the second quarter. In Q3 merchants processing over one year achieved a 42% year-on-year growth in credit card transactions, exceeding the 38% growth they reported the quarter before. So it appears, according to Schwegman that we are entering the holiday selling period with good online sales momentum. Further, higher gasoline prices may actually provide additonal incentive for shoppers to use online vs. in-store channels.
Coming down the homestretch in these last two months of the year, trying to estimate the peak shopping day is harder this year than in past years. This is because the biggest shopping day has historically been the Monday that falls at least seven days prior to Dec. 25th. By that formula, in 2005, the peak shopping day will be Dec. 12th. But there's a complication this year. Monday the 19th is almost seven days prior to Christmas day, so it may be possible that the 19th will be the peak day if enough online merchants and shipping providers decide to guarantee December 24th delivery for orders placed on the 19th. In any event, it seems reasonable to expect that the peak online selling period this year will be Dec. 12th - 19th.
Over the past two years the average on-line merchant has seen order levels about 40% higher in the peak selling period compared to the first week of October. Diamond and jewelry merchants see much higher seasonality. The upsurge in orders typically starts the week following Thanksgiving, but 2004 saw an earlier uptick starting in mid-October as some merchants started holiday promotions earlier than normal.
Stay tuned.
