Online Spending Jumps in July

More people are shopping online and they are spending more on Internet purchases, possibly due in part to the federal tax refund, according to new survey results from Forrester Research.

"People are starting to think about back to school purchases and also, I think, they are just a little bit more bold because of the announcement and arrival of the checks from the tax refund," says Chris Kelley, a Forrester analyst. Single taxpayers have begun receiving federal rebate checks of up to $300, and couples are due $600 checks under the tax cut program pushed through by the Bush administration.

Total U.S. spending on online sales stood at $3.9 billion in May. It dipped to $3.2 billion in June and then climbed back to almost $4 billion in July, a one-month rise of 25 percent. The number of households that shopped online also grew from 13.1 million in June to 14.7 million in July, a 12 percent increase.

"I think the increase is very significant," says Kelley. "From May to June we saw a pretty big increase and that's despite the bad news about the economy going on and on plus the beginning of the summer when people were going on vacation and away from the computer."

Leisure Purchases

The buying public spent an average of $270 per person online in July, according to the Forrester's Online Retail Index, which measures the growth and seasonality of online shopping. The Index is based on 5000 responses during the first nine business days of each month.

Like offline shopping trends, online sales tend to rise during the end of the year holiday season. Last year, they peaked at more than $6 billion in November.

Leading the big-ticket purchases in July were typical vacation expenses: airline tickets, accounting for $746.2 million; and hotel rooms, racking up $445.2 million. Car rentals were fifth with $188.6 million in purchases.

Following those categories, online shoppers spent the most money on computer hardware ($335.8 million) and consumer electronics ($191.9 million).

Topping the list of lower-priced purchases were apparel ($224.8 million), toys and video games ($162.5 million), books ($151.6 million), health and beauty supplies ($121.4 million), music ($118.3 million), software ($112.8 million), and videos ($109.9 million).