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Online sales rise post-Christmas – but could returns burst an internet bubble?

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Early indications suggest Boxing Day was the busiest online shopping day ever in the UK, though traffic appears to have fallen short of predictions.

Information service experience Experian reported 113m visits to retailers’ websites during December 26 – 17% up on the same day in 2011. Meanwhile High Street traffic for the same day rose by just 0.64%, according to Experian. The organisation, working with IMRG, forecast 126m visits on Boxing Day. That would have equated, the two forecast, to spending of £472.5m.


The 113m visits made on Boxing Day were also only slightly ahead of the 112m site visits that Experian detected on Cyber Monday.

Experian also reported high levels of traffic on Christmas Eve, when 84m visits were made to retail websites (86% up on the same day in 2011), and on Christmas Day (107m visits, 71% up).

James Murray, digital insight manager at Experian said the figures were evidence of “sales creep”. “Five years ago we called it the January sales, before it became the Boxing Day sales, now retailers have to call it the winter sales as discounting starts earlier to encourage higher spending,” said Murray.

Figures from IBM analysed web transactions on 150 retail sales to focus on sales. It suggested that Boxing Day sales were 44.95% up on the same day last year. Its data, drawn from the IBM Digital Analytics Benchmark, also found 30.72% of consumers visited retail sites using a mobile device, while 24.73% of consumers used those devices to make a purchase.

The iPad generated more traffic than other tablets or smartphones, with 15.84% of online shopping taking place over the tablet on Boxing Day. And 0.19% of all online sales came from social network referrals, from sites including Facebook, Twitter, LinkedIn and YouTube.

“These figures don’t come as a surprise,” said Chris Withers, head of Smarter Commerce UK, IBM. “Retailers started their promotions early this year, but shoppers have still been holding out for the best prices around and after Christmas. Going online is one way of ensuring they get these deals.” He continued: “The combination of an increase in use of smartphones and tablets, better retail websites, and devices such as the iPad being top of most gift lists this year has created a perfect storm of factors for healthy Boxing Day online trading. Retailers now need to ensure they keep on providing the best customer service possible across all of the places their customers shop.”

Data from delivery management specialist MetaPack measured deliveries following on from those post-Christmas sales. It found record volumes sent in the period between Christmas and New Year, up by 69% on the same time last year, with sales growth strongest in the clothing, footwear, home and garden and sports and leisure sectors.

MetaPack reported that Debenhams, Boohoo, House of Fraser, The White Company, Barratts, Missguided , Sports Direct and Asos were among the retailers who had warehouse operations running everyday post Christmas with Asos even preparing goods for despatch on Christmas Day.

“Internet shopping goes from strength to strength, with people having the confidence to leave their Christmas shopping later and then looking for bargains for themselves even after cut-off dates have passed. And where it may not be possible to get out to the shops on the public holidays the ease of getting online and buying from home seems to win out and the online retailers that are exploiting this fact will be the winners in 2013,” said Patrick Wall, MetaPack chief executive and founder.

But some are now looking ahead to what happens after the deliveries, predicting that up to 40% of clothing and between 5% and 10% of electrical goods and homewares bought via the internet or catalogues are returned to stores by shoppers who change their mind.

Simon Irwin, an analyst at Credit Suisse, told the Guardian: “Product returns no doubt have a small part to play in why December has been consistently stronger for retailers relative to the months after it.”

In the same piece, however, John Stevenson, a retail analyst at Peel Hunt, said returns do not change the fact that online sales are growing far faster than the high street, and returns do not, in fact, make a big impact on sales. “I would be amazed if we get to the year end and find out there has been an issue with returns,” he said.

Heikki Haldre, founder and chief executive of virtual fitting room provider Fits.me, commented:

“If the returns rate for clothing in January is really only 40% then I think most retailers would breathe a sigh of relief – anecdotally I have heard of rates approaching 70% in January as unwanted or incorrect Christmas gifts and spontaneous purchases made during post-Christmas sales are returned. Irrespective of how return rates are reported or accounted for, or whether they are 40% or 70%, such levels must be crippling for retailers – just the impact on cash flow must be painful.

“The clothing sector has seen the proportion of sales made online rise from 10% in 2010 to 12% in 2011, and it may easily have exceeded 15% in 2012 – this is perfectly plausible since research shows that more than half of retailers say their online sales are growing at 25% or more. But since return rates for clothing sold online is predictably higher than for items sold in-store, it’s inevitable that returns as a proportion of overall sales will increase, and – if it’s not already – it will quickly become a problem for those retailers that find themselves doing more and more of their business online.”

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