"Every Who down in Whoville liked Christmas a lot ...
But the Grinch, who lived just north of Whoville, did not!
The Grinch hated Christmas! The whole Christmas season!
Now, please don't ask why. No one quite knows the reason."

 -- The Grinch Who Stole Christmas by Dr. Seuss

Uh-oh, it's the Grinch!

There's an icy hush in e-tail as we head into the telltale holiday season. Market watcher comScore is predicting that domestic online retail will clock in at $29.2 billion this season, flat with last year's showing.

If that sounds like bleak news for a sector that has always grown, it gets worse. There's a good chance that comScore's data is overly optimistic. After all, the firm's own data shows that November activity through this past Sunday fell by 4%. That is certainly not the kind of negative momentum that the industry wants heading into a critical shopping season.

The consumer's heart is in it, but its pocketbook is just two sizes too small.

The signs were there
With mall operators filing for bankruptcy protection and retail chains buckling, this should have been the mother of all opportunities for e-commerce. Bargain-sniffing shoppers can relish the online medium where rival price checks are just a few mouse clicks away.

However, e-tail was already showing signs of breaking down during the past few weeks of bellwether sites posting their third-quarter reports. Many of the stand-alone e-tailers have already started to talk down their guidance for the current quarter.

  • Amazon.com (NASDAQ:AMZN) provided a wide range of revenue guidance, with net sales projected to rise by as little as 6% on the low end. That's a pretty sharp drop-off for the country's leading Internet retailer after growing net sales by 36% through the first nine months of the year.
  • "This holiday shopping season and the quarters ahead will be challenging for the retail industry," Overstock.com (NASDAQ:OSTK) CEO Patrick Byrne notes, without issuing guidance. The closeout specialist did point out that its model is well-suited for this environment, with distressed distributors and manufacturers giving Overstock plenty of opportunistic inventory-buying opportunities, but you still need demand to meet the supply. Through the first nine months of 2008, Overstock's 22% top-line growth is dwarfed by Amazon's surge.
  • Online jeweler Blue Nile (NASDAQ:NILE) has put an end to its near-term outlooks, but it's really just a matter of saying nothing when you have nothing nice to say. Net sales fell by 3% in its latest quarter, as the engagement ring specialist has been a laggard lately.

Smaller chains are also feeling the pinch. New jewelry auctioneer Bidz.com (NASDAQ:BIDZ) slashed its holiday quarter revenue outlook by a third earlier this month. Apparel specialist Bluefly (NASDAQ:BFLY) also used the word "challenging" in describing the current climate during this month's conference call, but feels that the company is well-positioned to capture market share in the tumultuous marketplace.

Put it all together, and you get a very unflattering snapshot. Companies that are manifesting glimmers of optimism aren't willing to spell it out in concrete guidance, and those that are going out on a limb in providing an outlook are talking down their prospects. If I had to choose between the silent smiles and the chatty grimaces, I'd go with the grim talkers.

They'll have a blue Christmas without you
It gets worse. comScore also conducted a survey of holiday shoppers. It may be encouraging to find that 39% of the respondents are shopping online to take advantage of free shipping promotions and the ability to skirt sales taxes, but 47% of those taking the survey said they would be buying fewer gifts (and 46% will be buying cheaper gifts).

The pure online retailers will also be challenged as conventional merchants continue their push into cyberspace. Best Buy (NYSE:BBY), for instance, is offering some of its Friday door-buster deals on BestBuy.com a day early. Department store chain Kohl's (NYSE:KSS) is offering most of its door-buster deals online, three hours before its stores open.

So, be careful out there. And, no, I'm not talking about those shivering outside of Best Buy in the wee hours of Friday morning to get their hands on a marked-down laptop. I'm talking about shareholders of online retailers. All signs point to the Grinch already stealing this Christmas.

Sorry hungry shoppers, this roast beast has already been carved out.

Rudolph's nose and Santa's suit aren't the only things seeing red this season: