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ONLINE HOLIDAY SALES MAY OUTPERFORM OFFLINE

Posted on December 28, 2001

      It may have been a dismal holiday shopping season for many off-line merchants, but evidence is mounting that e-commerce sales exceeded some of the pre-Christmas forecasts, which would be welcome news for the Internet community.

      Giant Internet pure-play Amazon.com, for instance, reported that it tallied more than 37.9 million items ordered as of midnight PST Dec. 21, although it added that such figures "should not be viewed or used as a predictor or indicator of revenue or other financial information..."

      Still, it's evidence of something, and it seems to be backed up by news from other companies. Microsoft Corp. reported e-commerce holiday sales at its MSN.com portal rose 56 percent over last year, and Yahoo! Inc. said Tuesday that holiday sales at its sites were up 86 percent.

      Comparison shopping operation BizRate.com said online sales during the weekend before Christmas were $345 million, up 73 percent from the same weekend last year.

      "The traffic to Amazon sites has accelerated well ahead of other commerce sites," Piper Jaffray analyst Safa Rashtchy wrote in a research note. And, the jump in traffic appears to be corresponding with overall sales volume, he added.

      In this its seventh holiday season, Amazon.com missed no chance to pat itself on the back a bit, saying in a press release that it again shipped well in excess of 99 percent of holiday orders in time to meet holiday deadlines -- including those placed by noon PST on Dec. 22.

      Of course, traffic and sales don't equal profits, and Amazon, for one, is expected to lose money again in its fourth quarter on a GAAP basis, even though the e-tailer has said it will likely report a pro forma profit. Fourth quarter results are due Jan. 22.

      A recent Goldman, Sachs advisory said "we are maintaining our estimate for $1.01 billion (in sales for the fourth quarter at Amazon), a 4 percent year-over-year increase (and) a significant slowdown from the 44 percent increase in the fourth quarter of 2000."

      Offline, 2001 will go down as one of the worst holiday sales seasons in a decade. The Redbook Retail Sales Average for year-over-year sales in the week ended Dec. 22 fell 0.6 percent, compared with a 1.1 percent year-on-year drop in the previous week, according to the weekly report by Instinet Research, a division of Instinet, a Reuters-owned electronic brokerage.

      Discount stores like Wal-Mart seemed to be among the exceptions as consumers, battered by recession and war worries, kept a tight grip on their wallets.

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