Video: 'Cyber Monday'

updated 11/26/2007 5:56:40 PM ET 2007-11-26T22:56:40

After a long weekend of battling maddening crowds at the malls, the last thing most people want to do is go back to the stores after work to do more shopping.

To make it easier for the bruised, battered and otherwise shopped-out, retailers kicked off the official start to the online season, dubbed "Cyber Monday," with lots of come-ons to keep the cash registers ringing even as consumers return to work.

With an overall holiday season that is expected to be the weakest since 2002, and the number of new online customers leveling off, Web retailers are dangling even more incentives to keep them buying online, from fat discounts to free shipping without minimums.

On Monday, Wal-Mart Stores Inc. launched five days of specials only available at Walmart.com. The 150 online specials this week is triple the number that was offered a year ago and include $60 quartz cocktail rings and $1,198 Samsung 40-inch LCD HDTVs. Toys "R" Us Inc. held a one-day online sale, and rival eToys.com launched a two-day sale.

"More and more retailers are using Cyber Monday as a promotional event," said Andrew Lipsman, senior analyst at comScore Networks Inc., an Internet research firm.

Target Corp., Circuit City Stores Inc., Sears Holdings Corp., Crate & Barrel, the Discovery Store and Overstock.com Inc. were among dozens of retailers offering free shipping Monday.

The incentives seemed to work, with many sites reporting surges in traffic that at least met expectations. Ice.com, an online jewelry site that offered 20-percent-off coupons, reported that traffic soared more than 70 percent and sales were up 82 percent as of Monday afternoon. Ice's CEO, Shmuel Gniwisch, had projected a 65 percent gain in business. Ebags.com, which offered a 20 percent discount on merchandise Monday, reported an almost 49 percent increase in sales compared with a year ago, beating expectations for 20 percent growth.

Raul Vazquez, chief executive of Walmart.com, expected 7 million visits to the site Monday, up from more than 5.5 million a year ago. As of mid-afternoon, plenty of items had already sold out, including $448 1-carat diamond earrings, $38 toy workbenches from Step2, and $10 Thomas the Tank Engine toys.

There were some snags. The heavy traffic overwhelmed an e-commerce service offered by Yahoo Inc., preventing consumers from completing purchases at thousands of Web sites Monday. The outages began late in the morning on the East Coast and continued for at least four more hours, Yahoo spokeswoman Kristen Wareham said.

The problems affected more than half of the roughly 40,000 sites that subscribe to Yahoo's "merchant solutions" service, which costs $39.95 per month plus a 1.5 percent sales commission.

While the first Monday after Thanksgiving kicks off the online holiday shopping season, it's not the busiest day for retailers, according to comScore. Last year, the busiest online shopping day was Wednesday, Dec. 13, generating $667 million in sales. The Monday after Thanksgiving was actually the 12th busiest day in terms of sales for the 2006 holiday season.

Still, Ellen Davis, a spokeswoman for The National Retail Federation, which coined the term "Cyber Monday," noted that even though more than half of U.S. homes now have high-speed Internet access, a growing number of office workers feel more comfortable shopping online at work. This year, according to a survey conducted for Shop.org, the online arm of the NRF, 54.5 percent of office workers with Internet access, or 68.5 million people, are expected to shop for holiday gifts from work, up substantially from 50.7 percent in 2006 and 44.7 percent in 2005.

Davis noted one reason is that consumers feel they have more privacy shopping from the office rather than from home.

Last year, NRF launched CyberMonday.com, which pulls together online discounts not just for Cyber Monday but for the entire holiday season. As of Monday afternoon, the site had 1 million visits, three times the number a year ago, according to Mall Networks, which powers the site.

ComScore estimated online sales would exceed $700 million Monday. That online surge follows a strong start to the holiday shopping season for brick-and-mortar stores over the weekend, but analysts still fear that the holiday season will be the weakest in five years as shoppers struggle with higher gas and food prices and a slumping housing market.

The research firm Forrester Research predicts online sales of $33 billion this holiday season, up 21 percent from a year ago. That's a slightly slower growth rate than the 23 percent seen last year. ComScore projects a 20 percent online sales growth for the holiday season.

Helen Malani, shopping expert for Shopzilla.com, a search site, said she believes more people will shift their purchases online because of hidden costs associated with shopping at brick-and-mortar stores, like parking fees and eating out. Shoppers are more sensitive to these hidden costs at a time when they are shelling out more money for food and gas, she said.

Still, online executives noted some encouraging signs about consumer spending behavior Monday, even in a challenging economy.

Walmart.com's Vazquez said sales were strong across all price points and categories.

Peter Cobb, co-founder of eBags.com, reported that the average purchase is now $87, up from $75 last year.

Gniwisch of ice.com, which operates ice.com and diamond.com, said average orders have increased to $233, compared with about $200 a year ago.

Josh Silverman, general manager of shopping portal Shopping.com, said less than 25 percent of shoppers are searching for the cheapest item.

"People are not shopping only by price," he said. "They are looking for the best value."

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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