Tuesday, December 5, 2000

Internet Window Shopping Boosts Street Stores

European high street stores will reap the rewards of Internet 'window shopping' this Christmas, according to Jupiter Research, a Jupiter MMXI company. Traditional retailers will benefit from off-line sales of 7.5 billion Euros as a result of online window shopping, that is users browsing but not purchasing, during the run up to Christmas day. However, the festive season will also highlight the poor coordination of retailers' websites with their high street stores.

The research indicates that the Internet has a greater impact on off-line than online spending. While 25% of Europe's 80 million online users will shop online this year, 36% of the online population will use the Internet for researching their Christmas shopping in November and December before actually making their purchases in the high street. These 31 million online window shoppers will spend 7.5 billion Euros in off-line stores, more than four times as much as what will be spent online. Jupiter predicts that this year's online Christmas sales will reach 1.7 billion Euros, which represents 32% of the total amount spent shopping online in 2000.

"Traditional retailers cannot ignore the growing influence the Internet has on how people spend off-line. While Internet-only retailers do not profit from those consumers who window shop, the traditional retailers can. They can benefit from this behaviour by closely integrating their online and offline propositions," says Nick Jones, senior analyst with Jupiter Research.

Traditional retailers must exploit the Internet off-line
He explains that despite the opening of online stores by many traditional retailers this year, the integration of site and store remains poor in a number of key areas. Often it is not possible for consumers to locate items online and to check their availability in their nearest physical store, a key consumer concern in the run up to Christmas. In addition, the policy for returning goods purchased online is often stated on the site but can be poorly implemented by in-store staff.

Continuing concern for the security of payment and personal information on the Internet remains a key barrier for those users who have never shopped online. Merchants must also address a perception that prices are not always better online.

"Online retailers, both traditional and pure-play, must pursue these browsers," adds Jones. "It is essential to create incentives - beyond lower prices - which will stimulate window shoppers to complete a purchase. Traditional retailers can also use on-site promotions to drive visits to physical stores."

UK will spend the most online at Christmas
Jupiter estimates that in Europe online shoppers in the UK and Germany will be the highest spenders on the Internet for this Christmas, with sales reaching 591 and 490 million Euros respectively. In Sweden and France Christmas spending online will total 114 and 106 million Euros, 26% and 27% of the yearly online sales.

Items selling particularly well online this Christmas include music and toys. 103 million Euros will be spent on music, just over one third of the total predicted sales of 297 million Euros this year. Europeans will spend 36 million Euros, the equivalent of one third of the total annual online spend this year on buying toys this Christmas.

Online Spending Up Thanksgiving Week
Home Internet users spent $1.3 billion online during the week of Thanksgiving, an increase of 140 percent over the same week in 1999, according to a Goldman Sachs / PC Data study released today.

Consumers spent heavily on online travel during the Thanksgiving week spree, with travel spending topping the list at $215 million. Online spending levels for computer hardware ($170 million), apparel ($136 million), toys ($117 million) and electronics ($95 million) were also notable.

While web spending is rising, almost one of three online Holiday shoppers (31 percent) said they encountered problems. Almost half of all shoppers who reported problems (47 percent) said that items they were seeking were not in stock. Thirty percent said they could not locate items they were seeking, while 26 percent said they had difficulty accessing or navigating a retail web site.

Despite these concerns, online shoppers remain optimistic about online Holiday shopping. Nearly 80 percent of respondents who bought online during the week said they were extremely likely or very likely to continue shopping online. Only five percent said they were not very likely or not at all likely to continue shopping online.

“During the Holidays, retailers in all channels are challenged to maintain inventory of hot gifts, and Internet retailers are no exception,” said Cameron Meierhoefer, PC Data Internet Analyst. “But the market for ‘hot’ items such as Playstations favors online retailers, because it’s convenient and easy to gauge availability and cuts down the frustrations of telephone or drive time.”

“Early indications point to online sales twice 1999’s levels, as nearly 90 percent of home Internet users stated they planned to spend more this year online than last year and two of the largest online shopping weeks lie ahead,” said Anthony Noto, Goldman Sachs Internet analyst.

PC Data Online, in cooperation with Goldman Sachs, surveyed 3,333 home-based Internet users Nov. 27 - 29 concerning their buying practices during Nov 19 - 27. The weekly survey is part of a study commissioned by Goldman Sachs e-commerce analyst Anthony Noto and PC Data Online to better understand and measure behaviors, attitudes and trends on online buying during the Holiday season. Goldman, Sachs, & Co. and PC Data separately provide comprehensive analyses of the complete surveyed results through traditional investment research channels.

News Tidbits (appears every day on front page)
- The Los Angeles Times today is tackling the failure and layoffs taking place with online industries. In part, the article states, "An estimated 22,267 laid-off dot-com pioneers are reeling from the assault that the first major downturn in the nascent industry has made on their careers, personal lives and psyches...While the layoffs so far probably amount to less than 1% of the estimated 2.3 million jobs that the U.S.-based Internet economy had created by 1999, their increasing frequency has injected a heavy dose of anguish, humility and introspection into the Information Age work force."

- AltaVista cancelled its free Internet Access service today with the following message posted on its site: "We regret to inform you that AltaVista's Free Internet Access is no longer accepting new users and will terminate service on December 10th. AltaVista has been forced to discontinue this offering because the company who provided the service and telecommunications infrastructure for it, 1stUp Corp., is going out of business. This change will not affect the availability of our search services at AltaVista.com."