Saturday, December 23, 2000

More Purchasers, Purchases and Spending Online

Preliminary results show that this holiday season, the number of online purchasers is up, with 49 million consumers spending, on average, 38 percent more on holiday gifts than last year’s online purchasers, according to new research released today by The Boston Consulting Group and Harris Interactive. Online retailers are, however, failing to fully capitalize on growing consumer demand as many potential online holiday shoppers have opted not to purchase online.

As of December 11, the average online holiday shopper had already bought six holiday gifts online totaling $234, up from $170 last year. In addition, the number of online holiday shoppers has already grown 23 percent compared to the 1999 holiday season, with 40 percent of the online population having bought a holiday gift online. Yet, a significant percentage of consumers who had earlier considered doing their holiday shopping online have decided not to. Research conducted in October, showed that 70 percent of the online population was contemplating doing some part of their holiday shopping online. The new research shows that twenty-seven million of those consumers, who represent 22 percent of the total online population, decided against purchasing holiday gifts online this year.

"While online retailers have been able to encourage individual consumers to do more holiday shopping online, there are still far too many consumers sitting on the fence," said Michael Silverstein, BCG Senior Vice President and Leader of the firm’s Consumer Practice. "These are the consumers who won’t believe in online retailing as a reliable alternative to traditional shopping during the holiday season until they try it for themselves, or a friend or relative convinces them otherwise. Word of mouth drives usage. So far, consumers are telling each other, it’s a mixed bag."

Leading into the final two weeks of the holiday shopping season, the pressure has been on online retailers to build on their momentum. Many online holiday purchasers indicated that they are continuing to shop online and eight percent of the online population still plan to buy a holiday gift online, but have not yet done so. The key to capturing this demand is to provide a superior online purchasing experience.

The survey revealed that 79 percent of online holiday shoppers were either satisfied or very satisfied with their holiday shopping experience, with 90 percent indicating that the product selection online was as good as or better than it is off-line. Twenty-one percent of consumers, however, have experienced a purchasing problem of some kind – such as receiving an incomplete order or receiving the wrong or a damaged gift. So far, eleven percent of gifts ordered online were received later than the scheduled delivery date.

"Despite nagging problems with delivery, consumer satisfaction remains quite high. Only three percent of consumers have expressed a clear dissatisfaction with their online holiday shopping experience," said Lori Iventosch-James, Director of e-Commerce Research for Harris Interactive. "As we enter the final few days of the 2000 holiday season, online retailers will have to make a concerted effort to ensure that all their fulfillment systems perform flawlessly as consumers await their last minute orders. This will be the true test for many online retailers."

Looking forward, these mixed findings offer a warning for online retailers in the New Year. "The online retail market in 2001 will be even more exacting for online retailers," said Peter Stanger, BCG Vice President and Topic Leader for Business-to-Consumer E-Commerce. "Consumers’ expectations are continuing to rise. If online leaders can achieve a level of consistency of service and reliability that leading catalogers have achieved, there will be a boost in volume, confidence and value. Too many times, out of stocks, unreliable fulfillment and difficult transaction closings have made the novice wary of time-critical purchases."

These findings were obtained from an online survey conducted by The Boston Consulting Group and Harris Interactive from December 8 to 11. This quantitative survey was completed by 1,930 Internet users over the age of 18 who live in the U.S., selected from Harris Interactive’s panel of more than seven million respondents. Results were weighted to reflect the U.S. online population.

Nordstrom.com Wins Apparel PowerRankings
Nordstrom.com's superior online shopping experience secures its victory in the latest rankings of online apparel retailers by Forrester Research, Inc. Forrester PowerRankings combines survey data from online consumers and unbiased shopping tests to provide objective rankings of the leading US eCommerce sites. The companies that rank below Nordstrom are Lands' End, L.L.Bean, Victoria's Secret, Old Navy, Eddie Bauer, Spiegel, Gap, J.Crew, and J.C. Penney.

Nordstrom's site sets a high bar for online shopping with a topnotch search engine, easy returns, and excellent customer service. The site provides links to return, privacy, and security policies on every page during checkout, and customers can ship to multiple addresses within one order. But Nordstrom.com -- like all sites -- has its flaws. For example, despite knowing a shopper's address, the site only estimates tax at checkout.

After winning two previous apparel PowerRankings, Lands' End winds up in second place. Its customer service representatives pick up the telephone in seconds and the return policy is unconditional, but online order tracking requires entering a number from the order confirmation email, tax is estimated, and there is no express checkout.

L.L.Bean comes in a strong third with clear inventory information, search results that can be refined, and fast email responses. But the site's to-do list should include creating an express checkout and adding online order status and history.

"In its first PowerRankings appearance, Nordstrom managed to defeat two-time champion Lands' End," said Tom Rhinelander, senior analyst at Forrester Research. "Both sites offer excellent customer service, but Nordstrom’s top scores in features, delivery, and returns put it over the top."

Weak scores across the board sink J.C. Penney to last place. Shoppers must endure the longest first-time checkout process of the ranked sites, and the order total is not given at checkout or in the order confirmation email. However, loyal customers have the option to pick up or return purchases at stores, and the site offers unlimited returns.

For the latest PowerRankings, Forrester surveyed 20,000 consumers from the NPD Group's online panel. These consumers identified the eCommerce sites that they purchased from most recently and rated their experiences. A team of Forrester shoppers then evaluated the shopping experience on sites that have a statistically valid number of consumer respondents by performing a series of rigorous tests. The consumer data and Forrester shopper scores were then synthesized and weighted, with consumer views accounting for two-thirds of the overall PowerRankings. A complete set of PowerRankings results -- both consumer and Forrester shopper data -- is made available to all ranked companies free of charge.

News Tidbits (appears every day on front page)
- According to an AP story appearing in USA Today, "Raising questions over who controls the Internet, Yahoo! is asking a federal judge to block a French court's order that it keep computer users in France from accessing online auctions of Nazi paraphernalia. In papers filed in U.S. District Court in San Jose on Thursday, attorneys for Santa Clara-based Yahoo! said the French court violated the company's free speech rights and does not have jurisdiction over content produced by an American business."