Consumers Plan More Online Spending But Wait While Watching Deals

Why go out looking for bargains when they’ll come home looking for you, eventually?

This holiday could witness a sea change in the relationship between consumers and online shopping. Coupon and other bargain oriented sites, including a new generation of discount search aids, are launching – or relaunching – on the web and retailers already are fighting it out over books. Such initiatives can only further convince consumers that, to find a bargain, the place to start is online and a lot of them are going to stay there to do their purchasing. Keep in mind that, for many retailers, the only part of their operations that enjoyed sales gains last holiday season was their websites. And a study suggests that might be the same again this year.

Consumers anticipate that they will spend an average of $281 online during forth quarter of 2009. While that’s 18 percent less than the overall spending rate for the final frame of 2008, it represents a 24 percent increase over last quarter according to the eBillme Online Spending Index. And that gain represents the first spending increase since last year.

The index, a collaboration between eBillme and Javelin Strategy & Research, is a quarterly review of consumer spending trends online. Beth Robertson, director of payments research for Javelin Strategy & Research, noted that the index gain from last quarter demonstrated improvement in the online retail sector even if 51 percent of consumers report that they are delaying purchases because of continued uncertainty in the economy. No matter the Conference Board, she said, “this increase is a positive sign that consumer confidence is on the rise.”

In terms of when they said they will do their shopping, 11 percent of respondents plan to do most of their holiday purchasing on Cyber Monday, while 48 percent said they would avoid Black Friday store visits in favor of shopping online. While most consumers will purchase the same amount or less on line, about 27 percent plan to boost what they spend this year for holiday gifts via the web.

Marwan Forzley, President and CEO of eBillme, noted that whatever additional spending might come, it was likely to be conducted in a deliberate manner that won’t stretch finances. Among consumers surveyed, 40 percent said they plan to use their credit cards less often in favor of non-credit payment options as this year draws down. “We have seen this significant shift in attitude towards credit carry over from previous quarters, and it will definitely impact consumer spending decisions this holiday season,” he said.

The decision to delay online shopping in a season when store visitors, with plenty of retail encouragement, began browsing for the holidays early suggests that consumers expect to find later bargains. Retailers are again abetting this behavior. Just recently Sears Holding announced that it would extend the holiday layaway program it developed at Kmart last year to the online space. And when Amazon, Walmart and Target got into a price war over highly anticipated book releases, they threw free shipping into the mix on top of more discounts that reduced the price of $30 books to the vicinity of $9.

Anticipation of more shopping deals arising is great motivation for consumers to delay purchasing on line. Given a predisposition to spend more online, as indicated by the survey, the economy may not keep consumers from purchasing. It may just be encouraging consumers to be patience about purchasing. And the math argues for patiences as well. Consumers determined to spend 18 percent less on line but seeing retailers resort to 60 percent off deals this early in the season certainly realize that they can get a lot more stuff for the money they mean to part with by awaiting big bargain occasions. And free shipping, to boot.