Consumers remain wary of Internet gift return process: online sales for holiday season expected to reach $27 billion.

SANTA may be more wired than ever, but many consumers remain wary.

Online retail sales this holiday season will reach $27 billion, a 23 percent increase over last year, according to a new study from Forrester Research.

Almost one-fifth of the nearly 4,000 consumers surveyed say that the Internet will be the place where they shop the most during the holidays.

However, many say they prefer not to buy online altogether because of the prospect of dealing with returns.

In general, consumers stated that they are pessimistic about their overall online retail holiday spending, but Forrester believes consumers understate spending expectations. The survey asked about spending plans in 10 categories and found that consumers expect to spend more on a few core categories--13 percent say they will spend more on toys this year and 10 percent will spend more on DVDs and videos.

Part of the overall pessimism toward online shopping is the result of concerns over service. Fifteen percent of consumers said they received orders late last year. Returns are also a sore spot with half of consumers finding the process of returning items to be a hassle and 27 percent say they prefer not to buy online altogether due to return concerns.

"Online commerce executives must recognize that everything consumers experience after they reach a confirmation page is just as important as everything that happens prior," said Forrester Senior Analyst Sucharita Mulpuru.

The trend of consumers increasingly shopping online extends beyond the holidays. A recent five-year forecast from Forrester report projects that online retail will reach more than $270 billion and comprise nine percent of total retail sales by 2011. The analysts expect the greatest penetration in computer hardware, software and peripherals, baby products, and toys and video games.

Staff reporter Dan Cox can be reached at [e-mail] or a [phone], ext. 230.