Online Retail Sales Hike Expected in 2005

Online sales expected to be up to 30 percent over last year. Susan Stamberg talks with Nancy Koehn, a professor at Harvard Business School, about online sales this holiday season.

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STEVE INSKEEP, host:

During the Christmas shopping season, more shoppers than ever did not go to the store at all and went online instead. NPR special correspondent Susan Stamberg has the story.

SUSAN STAMBERG reporting:

Here's a sign of the times: At least one person skipped the limo ride to Tiffany's this holiday season and bought a $94,000 pair of diamond earrings while sitting in front of a computer instead. This according to Amazon.com.

Nancy Koehn of Harvard's Business School is on the line, and so I'm wondering, Professor Koehn, you think they were trying to save on gas?

Professor NANCY KOEHN (Harvard Business School): That's a good question, Susan. They were certainly trying to buy something they could research easily, quickly and they made the decision right there at their desk.

STAMBERG: So this is the argument in behalf of online, which is apparently--is it the brightest bulb on the holiday sales tree right now?

Prof. KOEHN: It is, by far and away. Online sales are expected to grow about 25, perhaps as high as 30 percent over what they were last year. They're still a very small percentage of overall consumer spending, but on a landscape in which the most optimistic estimates put holiday sales growth for 2005 at 8, 8 1/2 percent, 25, 30 percent looks awfully bright, awfully cheery.

STAMBERG: So what are people buying online, in addition to the diamond earrings?

Prof. KOEHN: They're not buying apparel, interestingly.

STAMBERG: Huh. Well, because there--why? You want to try it on to really know how it looks?

Prof. KOEHN: Want try it on, and overall, you know, chalk it up to a warmer-than-expected winter. People bought a lot less clothing than they did last year during this holiday season.

STAMBERG: Huh. What about the issue of security, Professor Koehn? Are people not worried about that?

Prof. KOEHN: Particularly this year, we are seeing more and more people get real comfortable now with the sense--with the idea that their credit card number is secure when they give it to a retailer of any shape or size on the Internet. That's partly about changing technology on the part of online retailers, but most of it is about a psychic shift in consumers' heads, as now literally tens of millions of people move online and spend a lot of time online.

STAMBERG: Thank you very much. Nancy Koehn is a professor at the Harvard Business School.

I'm Susan Stamberg, NPR News.

INSKEEP: This is MORNING EDITION from NPR News. I'm Steve Inskeep.

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