Online Retail Off to Respectable Start

Online businesses are providing some bright spots amid thegloom that has enveloped the retail sector in recent weeks.

Despite weakening consumer confidence and a dismal economic outlook, Internet sales over Thanksgiving were up slightly compared with last year, according to retail analyst firm comScore. Boosted by a slew of special offers from anxious retailers, Web sales on Thanksgiving Day and Black Friday increased 2% from the same period last year.

Although online sales those two days slowed significantly from the growth seen in 2007, when they were up more than 20% from the prior year, the figures will offer some comfort to online retailers and other Internet firms.

With Cyber Monday, the traditional start to the online holiday shopping period now underway, companies such as Amazon.com(AMZN Quote), eBay(EBAY Quote) and search giant Google(GOOG Quote) will be praying that this relatively solid start to the season continues through the coming weeks.

The initial signs are certainly good, explained Youssef Squali, an analyst at Jefferies & Co.

"Mildly positive year-over-year e-commerce growth data from comScore and eBay over the weekend indicate that the 'sky is not falling,'" he wrote in a note released Monday. "If sustained through year-end, this trend would be positive for Google, Amazon and eBay, among others."

Youssef also highlighted information from online payment specialist PayPal, now part of eBay, which suggests that online retail remains resilient in the face of the economic slowdown. PayPal handled 34% more Black Friday transactions than in 2007, and also saw a 26% increase in payment volumes, a clear sign that consumers were rushing to buy heavily discounted products.

Despite the apparently positive online shopping figures, though, shares in Amazon, eBay and Google were down Monday as the Nasdaq slipped 5.5%. Internet giant Google was the worst hit, and saw its stock dive $22.63, or 7.7%, to $270.33.

Shares of eBay dipped 63 cents, or 4.8% to $12.50, while Amazon's stock fell $1.02, or 2.4%, to $41.68.