Seasonal goodwill? The e-Christmas verdict

Every year online purchases ahead of the Christmas holiday season seem to become increasingly important to e-tailers. Here, Sonya Rabbitte asks what Santa did for the prospects of Amazon and co...

Arguably the biggest question hanging over the e-tail sector remains whether Amazon will make it into the black within the desired timeframe. That date, when its Q4 figures are revealed, is fast approaching and achieving the analysts' Holy Grail of operating profit would deliver a boost to it and countless other companies selling to the public over the web.

However, the race to profitability may now have been decided by a youngster going by the name of Harry Potter. The boy wizard boosted Amazon sales over the holiday period with shoppers on all five Amazon sites placing close to half a million orders for Harry Potter books and related products. The second best-selling gift - the Shrek video and DVD - sold 150,000 copies.

While we'll have to wait until 22 January to see if Harry Potter worked his magic on the dollar figures, Amazon's Wonka-esque named 'delight-o-meter' showed its five international sites were as busy as orange-faced Oompa Loompas , processing a total of 37.9 million orders between 9 November and 21 December.

A further 36,000 last minute orders were received between 21 December and midday 22 December and, according to Amazon, less than one per cent of those orders missed the Christmas deadline.

Regardless of profit concerns Amazon obviously feels well placed to blow its own trumpet. Post-Christmas figures from Nielsen/NetRatings place Amazon.com in the top 10 sites visited by US shoppers although it did languish at number nine in a list dominated almost completely by clicks and mortar sites.

Jupiter MMXI has also tallied US online Christmas sales and reckons online traffic during Christmas 2001 was up 50 per cent on 2000 with over 51.3 million unique visitors logging on to shopping sites each week. That compares to about 34 million in 2000 and 26 million in 1999.

Amazon, along with eBay, also topped Jupiter's figures, both sites attracting more unique visitors during the season than any others.

eBay received an average of 4.5 million visitors per day compared with 2.4 million in 2000. Amazon managed 2.5 million visitors compared with 1.5 million in 2000.

But Jupiter also found that clicks-and-mortar sites are catching up with pure play dot-coms. Seven clicks and mortar sites that rank among Jupiter's 15 most popular shopping destinations saw traffic figures grow 73 per cent over 2000. Percentage growth for eBay and Amazon was down around 40 per cent.

James Roper, chief executive of the Interactive Media in Retail Group (IMRG), agrees that clicks and mortar sites gained ground in 2001, with Argos, John Lewis and Tesco all reporting healthy results.

But he claimed that success does not depend on the backing of a high street parent - as Amazon proves - rather it's all about getting the mix right.

He said: "For some sites this Christmas was fantastic. Others just didn't get it right. It wasn't any one market or sector in general. Shoppers were there, customer confidence was there, those who got the mix right - the pricing, the products, customer service - did well."

Yet while percentages for both visitors and unit sales seem to be up on last year, the research released in the first week of 2002 offers little in terms of concrete dollar figures.

In November, Forrester Research predicted Americans would spend $11bn online this Christmas - a 10 per cent rise on 2000.

This was the case up until 21 December when Forrester analysts backtracked and decided Americans might only spend $8bn.

The same research house forecast Europeans would spend E4.1bn online this Christmas. Whether they did or not remains to be seen.

In the UK, online trading got of to a brisk start, according to web-monitoring company Keynote Systems, although there is evidence consumers still lack confidence in online order fulfilment as figures trailed off from 11 December onwards.

The end of November and beginning of December saw Amazon.co.uk falter a little, taking an average 10.79 seconds to download during the week beginning 27 November.

In the same week these Amazon visitors looking to buy a CD or DVD could have accessed Virgin.co.uk in just 0.69 seconds and book hunters could have been in borders.com in 2.10 seconds.

On average only Sainsburys.co.uk was slower than Amazon.co.uk during peak shopping periods, taking 13.16 seconds to download during its slowest times.

Christina Mueller, communications manager at Keynote, said Sainbury's poor performance shows some sites are still not prepared for heavy volumes of online shoppers.

However, overall Christmas performance by the 18 UK shopping sites surveyed by Keynote outdid the average results of its weekly Keynote 40 survey, suggesting many sites did implement extra features for the seasonal rush.

Yet perhaps more than anything, the crucial Christmas figures highlight an even bigger point - websites are losing revenue as customers become more internet savvy.

Keynote, for one, reckons the eight second rule - whereby customers are prepared to wait only eight seconds for a page to download before clicking away - is diminishing.

"That threshold is becoming less and less. It's now the five second rule. From our point of view everything up to 3.4 to four seconds is acceptable. Everything above this could be improved," Keynote's Mueller said.

Although sales figures - in monetary as well as unit terms - have undoubtedly improved over Christmas 2001, the question remains have they increased enough?

Milestones such as Amazon's transition to a profitable company, even given the way they'll choose to measure it, are perhaps more important. Let's see what happens when Amazon reports its Q4 on 22 January.