Holiday shopping season off to a promising start

Is the wireless industry set to receive a gift-wrapped present from consumers this year, or will the lingering economic malaise result in a lump of coal for carriers?
With the first “official” week of the holiday shopping season 2009 in the books, a mixed-bag of predictions have been proffered with results showing perhaps a slight increase in sales over the Black Friday to Cyber Monday weekend. For wireless, the picture is a little brighter, but with weeks to go in the season, no one is counting their chickens just yet.
Data from online analytics provider Compete Inc. showed a dramatic increase in consumer interest in at least searching carrier Web sites over the weekend. Compete’s data showed that Web traffic to carrier Web sites surged from just over 1.4 million hits on Black Friday last year to more than 4.3 million hits this year.
That growth was a bit more muted for Cyber Monday, which saw traffic jump from nearly 3.7 million hits in 2008 to just over 5.1 million hits this year.
While these numbers do not correlate to actual sales, it does show that consumer interest in wireless services, at least online, is looking robust for the holiday shopping season.
Overall, ComScore Inc. said online sales for Black Friday jumped 11% year-over-year to $595 million, while Cyber Monday sales were up 5% to $887 million.
Aggressive moves
One thing that would be hard to do is to blame operators for not trying. Handset subsidies hit new levels with carriers dropping the prices on a number of highly desirable devices, including feature-packed smartphones. These latest cuts followed previous discounts announced last month in an attempt to jump start the holiday shopping season.
AT&T Mobility today unveiled new, half-price discounts on Research In Motion Ltd. BlackBerry devices and free Samsung Electronic Co. Ltd.’s Solstice model.
Of course many of these devices required both the usual term commitments as well as in many cases a premium monthly fee for mandatory data packages. Short term the carriers took a hit on higher subsidies with expectations to make it up – and then some – on the data packages.
Verizon Wireless even took the unusual step of increasing the early-termination fee on some devices from its regular $175 to $350 in an attempt to ensure customers served out at least a portion of their contracts. While the doubling of the ETF may seem excessive, it’s worth pointing out that many of the devices tagged with the higher fee typically have discounts in excess of $350 when comparing the no-contract price to the fully subsidized, 2-year contract price.
Regardless, the increase has generated a letter from the Federal Communications Commission asking the industry’s largest carrier the reason for the increase.
Verizon Wireless’ competitors have so far not followed its move.
Handset vendors also got in on the act with HTC Corp. offering a $100 rebate on top of regular carrier subsidies for consumers trading in select smartphones for the manufacturer’s devices.
Mobile traffic surges
In a tangential survey, mobile browser developer Novarra Inc. said it saw a 1,209% increase in traffic to retail sites from mobile devices in the U.S. and United Kingdom on Black Friday and a 110% surge on Cyber Monday.
Novarra said the results were based on a sampling of Web traffic through Novarra deployments for a variety of ‘brick and mortar’ retailers in the U.S. and U.K., including Abercrombie, Argos, Asos, Best Buy, Curry’s, Debenhams, John Lewis, Macy’s, Nordstrom, Sears, Target, Tesco, Top Shop and Wal-Mart, as well as online-exclusive retailers Amazon and eBay.
In the U.S., Best Buy’s Web site generated the largest increase in traffic from mobile devices on Black Friday with Novarra reporting a 792% increase in traffic, followed by Wal-Mart’s 740% increase and Sears’ 492% increase.
“This is further confirmation that consumers increasingly rely on the Internet via mobile phones for their daily habits and routines,” said Scott Cotter, senior director of marketing, Novarra. “For many shoppers, browsing special deals, comparing products, pricing and other information while they are on the run – even at a retailer’s location, has become second nature.”
With just a few short weeks’ left before the holiday shopping season concludes, and a week further until the all-important fourth quarter will wrap up, the success of the early going is paramount. If carriers do not see growth in line with expectations, they may be forced to unleash a late-season barrage of discounts in hopes of meeting both internal forecasts and external demands.