Small Business Holiday Sales Surge

By Patricia Fusco | Posted January 23, 2003
Although traditional retailers reported a sales slump for the fourth quarter of 2002, online small businesses operating e-commerce Web sites experienced a boost in holiday sales. At least according to a study of 5,000 small- to medium-sized businesses that participated in a survey conducted by Affinity Internet.

More than 40 percent of online small businesses report increased sales from their e-commerce Web sites this holiday season, when compared to 2001 sales. Of those businesses reporting higher sales, 79 percent experienced sales increases in excess of 10 percent — half said their sales increased more than 20 percent.

In contrast, Goldman Sachs index of same-store sales reports that the retail industry experienced one of the worst holiday sales seasons in the past three decades — only one percent reported improved sales over 2001 performance.

"Given the general increase in Internet usage and the number of households now with high bandwidth connections, it isn't a surprise that small businesses with a Web presence are starting to sell more online," Jim Collins, Affinity chief operating officer, said.

Online Small Business Trends
Of course, if 40 percent of sales are up, then 60 percent of sales were down or flat. Thirty-one percent of small businesses surveyed reported negligible comparable sales for 2002 and 28 percent reported decreased sales. This is understandable, since 62 percent of small businesses indicated that they solely relied on "word of mouth" advertising for the holidays and another 67 percent said they did not even offer sales incentives — like free or discounted shipping as an incentive to buy.

The Affinity survey also found that e-commerce sites selling collectors' items accounted for the largest increase in sales, totaling 60 percent. Other popular categories of goods proved to be toys, jewelry, apparel, books, music, and movies. Additional key findings include:

  • Most sales (68 percent) consisted of one to three items.

  • Traffic on the sites surveyed was also up — an average of 43 percent.

  • Most (75 percent) owners of online small business owners are male.

  • More than half of online small business owners have a four-year college degree or higher (54 percent) and all have finished high school.

  • Contrary to popular belief that young people are the primary group using the Web as a location for their business, 80 percent of online small business owners surveyed are over the 30-years-old.

Although there does not seem to be any specific geographic concentration of online small businesses, most online business owners surveyed have one to five employees (68 percent). Additionally, 15 percent of businesses surveyed are sole proprietorships and more than half of the owners (51 percent) say running their online business is their primary occupation.

Affinity Internet is a hosting service provider that specializes in serving small- to medium-sized businesses. The company hosts more than 390,000 domains for more than 170,000 customers worldwide. The survey of 5,000 small business clients was completed early in January 2003.

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