Holiday e-commerce projections lowered

Update at 10:30 a.m. PST, with information from IDC holiday spending report.

The Grinch has made off with Christmas.

In yet another sign that e-commerce is taking a hit over the holidays, online sales growth projections for the critical November-December holiday shopping season were cut by more than half Tuesday in a survey released by digital marketing and media research firm eMarketer.

Online sales are expected to grow a mere 4 percent year over year to $30.3 billion during the two-month period, versus eMarketer's previous projection in May of 10.1 percent growth, or $32.1 billion.

"The weak economy is placing downward pressure on e-commerce sales this season. That pressure accentuates the already declining sales growth that is a sign of the maturation of the online shopping channel," the market research firm noted in its report.

eMarketer's decision to revise its forecast follows the release of disappointing third-quarter e-commerce sales figures by the Department of Commerce.

For the entire year, eMarketer expects 7 percent year-over-year growth, marking the first time in a decade that e-commerce sales have climbed by only a single digit. Last year, e-commerce grew by 19.8 percent.

U.S. retail e-commerce sales in billions and percentage change.

(Credit: eMarketer)

This latest assessment of the holiday shopping season, however, is not as dire as a report released Tuesday by market researcher ComScore, which reported a 4 percent decline in e-commerce sales during the first 23 days of November, versus a comparable period a year ago. That marked the first time in history that e-commerce growth fell on a year-over-year basis.

PC and consumer electronics vendors, meanwhile, have taken their best guess of how the holidays will shape up and have shipped their products into the distribution channel for the holidays, IDC noted in its U.S. holiday consumer spending report, released Wednesday.

And based on reports from Taiwanese original design manufacturers (ODMs), the sentiment is "very weak vendor demand" for December and the first quarter next year. That will likely translate into a grim environment even after the holidays, given the product these ODMs design eventually make their way onto retailers' shelves, IDC's Randy Giusto noted in his report.

Added Giusto:

The big questions over the next 35 days are, will the holiday channel volume move? Will it require Black Friday-like sales interspersed throughout December in order to clear the inventory out? Will this holiday season be known as the great CE fire sale? Obviously, every retailer and PC and CE vendor is nervous. Consumer bargains are everywhere and new price thresholds have been established--notebook PCs for $299, 10 mega-pixel digital cameras for $129, Blu-ray players for $179, 500GB external drives for $69, 8GB SD cards for $19.99, 47-inch 1080p LCD TVs for $999, many new and attractive mobile phones for free or nearly free if purchased with two-year service contracts, and GPS units as low as $79 and now available at your local CVS and Walgreens.

[Penguinisto]

Okay - question... there's still growth going on, right? So why the drama?

[fdunn3]

So far I've seen about 8-9 Black Friday e-commerce site (sites I would normally do business with) and either the pricing is no different than their regular sales or they are discount mediocre products that nobody wants.

If they keep this up I can see a lot of e-commerce sites disappearing by the spring of '09.