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To: Johnny Canuck who wrote (35631)	12/24/2001 12:54:05 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69262

Counter point to the article on strength in internet sales. ***************** Online Shopping Star Turns to Lump of Coal Saturday December 22 4:34 PM ET By Scott Hillis SEATTLE (Reuters) - Online shopping, expected to be one of the few sparkling stars of a depressed holiday retail market, is turning into just another lump of coal. As the fog of the economic downturn settled on consumers in recent weeks, many had expected the glow of Internet shops would help guide retailers to a merry holiday. Alas, despite the fact that more people than ever are browsing online wares, holiday Internet sales are now seen falling well below initial conservative estimates of about $11 billion. ``Based on the current climate, we're scaling that back to around $8 billion,'' said Carrie Johnson, an e-tailing analyst with Forrester Research. That's a 20-percent drop from last year's $10 billion and marks a startling development for the sector, which has worn its double-digit growth figures as a badge of pride that set it apart from stodgy traditional stores and their two or three percent growth rates. A few factors lie behind the online consumption cold-snap. The obvious one is that the economy is slumping and people are getting laid off or are uneasy about finances. ``This year we are in fact seeing the impact much more so on the online channel,'' Johnson said. ``This is sort of the great equalizer of sales cycles, that online sales look more and more like traditional sales.'' Johnson also blamed unusually balmy weather in many parts of the country for depressing clothing sales, something that has hit both online and offline shops. Some analysts hypothesized a surge in Internet buying after the Sept. 11 attacks on New York and the Pentagon (news - web sites), reasoning that fears of more assaults would keep shoppers at home. But that scenario never played out. Moreover, desperate retailers are offering steep discounts. Traditional retailers know how to move merchandise by putting up special sales displays and peppering stories with ''Half-Price'' signs. But the online retailers are still figuring out how it's done. ``The deals this season have been phenomenal, retailers are flooding consumer (e-mail) inboxes with 10 percent off, 20 percent off, 30 percent off,'' Johnson said. One example is at eShop, the retailing section of Microsoft Corp.'s (Nasdaq:MSFT - news) MSN network. MSN promises to send buyers a $20 check for each $100 they spend at participating retailers. ``Because of the economy and what happened in September, people's budgets are smaller overall and they want to get more out of their budgets,'' said Jim Barr, general manager of MSN's commerce services. There are still a few choice chestnuts roasting on the Internet fire, though. Auction site eBay Inc. (Nasdaq:EBAY - news) is expected to win big this year as shoppers root through its selection of millions of items for bargains. Analysts also expect decent performance from Amazon.com Inc. (Nasdaq:AMZN - news), figuring that a nice rise in the number of units sold could translate into better-than-expected sales. Amazon gives one indication that its orders are up in its ''Delight-O-Meter,'' which shows the online superstore and affiliates had booked sales of more than 36 million items since Nov. 9 as of Tuesday evening. That compares to about 31 million total items sold from Nov. 2 through Christmas last year. Amazon stock has surged in recent weeks, twice racking up 30-percent single-day gains on optimism that sales would be better than glum expectations. But Amazon cautions against reading too much into the Delight-O-Meter, noting it sells more used, and therefore low-revenue, goods this year. ``It's tough to make year-over-year comparisons,'' Amazon spokeswoman Patty Smith said. ComScore Networks, a firm that tracks online surfing and spending trends and whose data is used by analysts like Forrester's Johnson, is more upbeat about overall e-tailing trends. ``We're encouraged by the momentum that the channel is showing,'' said comScore Vice President Dan Hess. ``While online is still a relatively small part of overall retail, we're seeing in certain sectors, like electronics and computers, very strong momentum from one week to the next,'' Hess said. Wall Street, however, has no more visions of e-tailing sugar plums dancing it its head. ``We continue to expect that online sales will mirror the slowdown in overall consumer spending, with growth for online sales for full year 2001 of 20 to 25 percent down from a 68 percent increase in 2000,'' Goldman Sachs analyst Anthony Noto wrote in a recent research note.