Wednesday, November 15, 2000
Heavy Online Shoppers to Increase Nearly 300 Percent
Jupiter Research, a worldwide authority on Internet commerce,
estimates that 6.3 million US residents will spend
the majority (more than 50 percent) of their holiday
budget online this year--an increase of 294 percent
from 1999 when only 1.6 million spent the majority
of their budget shopping online. In addition, Media
Metrix, the pioneer and leader in Internet and Digital
Media measurement, today revealed a 12-month audience
measurement trend showing that the proportion of visitors
to shopping sites throughout 2000 already resembles
the holiday season of 1999. Media Metrix's 12-month
audience ratings trend indicates that nearly the same
proportion of online users visited retail sites in
August 2000 as did in December 1999, 74.9 percent and
73.3 percent, respectively.
Jupiter Research estimates that a total of 35 million
people in the US will purchase gifts online this holiday
season, versus 20 million who shopped online last year.
This increase in consumers' online spending contributes
to the overall rise in dollars spent online this season,
$11.6 billion in December 2000 up from $7.0 billion during
the same period last year, according to Jupiter Research.
Purchases Not Limited to Books, Music, and Toys
Media Metrix reports that computer retail sites had the
largest number of unique visitors (23.1 million) and
were the "stickiest" category of shopping
sites in December 1999, with users spending an average
of 21.7 minutes; books and toys were the second most
popular category last year. This holiday season, Jupiter
Research predicts that books, toys, and music will
remain among the top products that consumers purchase
online, but a surprisingly large number of shoppers
will purchase online clothing or shoes--items they
traditionally prefer to seen, touch or try on.
"Consumers are likely to purchase clothing and
shoes online this holiday season because they are both
desirable gifts, and this year, a greater number of sites
are offering a large selection of brand-name apparel," said
Jupiter Research senior analyst, Ken Cassar.
Advice to Online Merchants
"
While online shoppers are price-conscious, they will
primarily be driven by the need to save time and avoid
crowds this holiday season," added Cassar. "Merchants
must not discount themselves out of business, particularly
when other factors can motivate consumers. This year,
many merchants are planning to offer free or discounted
shipping, free gifts with purchase, and other discounts
as promotions, but implementing such promotions could
turn into a costly mistake. Merchants must balance consumers'
desire for promotions and discounts while keeping an
eye on their bottom line."
Online vs. Brick-and-mortar Brands
According to Jupiter analysts, most online holiday shoppers
(79 percent) plan to spend at least 10 percent of their
total 2000 holiday budget online; 18 percent expect
to spend over 50 percent of their holiday shopping
dollars on the Internet this season, according to Jupiter
analysts. Last year, however, according to Media Metrix,
more visitors went to online-only retailers as opposed
to brick-and-mortar retailers with Web sites (55 percent
and 45 percent, respectively, among the top 100 retail
destinations in December 2000).
"The 1999 holiday season was the unofficial debut
for many online retailers, and the fact that almost three
of four Web users visited a retail site last December
indicates a widespread eagerness to use the Internet
as an alternative to on-site holiday gift shopping," said
Anne Rickert, measurement analyst, Media Metrix.
Research for Online Retirement Planning Advisors
Meridien Research, a leading financial industry technology
analyst firm, announced that it has concluded a 27-page
report where Meridien analysts examined the online
investment advisory solutions offered in the retirement
services marketplace.
The report explores the global potential for and the
problems faced by financial institution plan providers,
who are under pressure to create new value for their
plan sponsors and plan participants that will lead to
the retention of a participant's retirement assets when
he/she leaves one employer for another.
"For financial services institutions, the future
is all about finding the means to catch more customers
and retain them," said Stephen Ross, Analyst at
Meridien Research. "We believe the value associated
with retirement portfolio analysis, including forecasting
future portfolio levels, combined with personalized retirement
investment advice is the bait that will attract customers,
while plan providers are the fishermen in this analogy.
Keeping the bait fresh, with state-of-the-art functionality,
is essential to maintain its appeal."
According to the Executive Summary of the report: "For
financial services institutions, the future is all about
finding the means to catch more customers. In the case
of the retirement services market, there are two key
customer constituencies — employer-plan sponsors
and employee-plan particpants — that demand value.
We believe the value associated with retirement portfolio
analysis, including forecasting future portfolio levels,
combined with personalized retirement investment advice
is the bait, wheile plan providers are the fishermen
in this analogy. The other competitive pressue in this
marketplance — among back-office recordkeeping
systems venders — should lead one or more to acquire
one of the independent online advisors.
Glitches in the 1999 Holiday Season are Unlikely to
Deter This Year's Online Shopper
Ninety-six percent of last year's holiday online shoppers
intend to purchase gifts online again this year, even
though more than half of them experienced a purchase
failure in the last holiday season, according to new
research from The Boston Consulting Group (BCG) and Harris
Interactive.
"In spite of a high incidence of out-of-stock items,
system crashes, poor selection, and delivery problems,
the vast majority of last year's online holiday shoppers
said they are willing to give it another go. And they
are also willing to spend more this time around," said
Michael Silverstein, BCG Senior Vice President and Leader
of the firm's Consumer Practice. "Many consumers
aren't, however, prepared to go back to the sites where
they experienced the purchase failure in the first place.
They will go to different online retailers."
The research shows that online shoppers who purchased
online last holiday season experienced a variety of failures:
28 percent wanted to buy an item that was out of stock.
22 percent gave up trying to buy an item because the
Web pages took too long to load and another 17 percent
gave up because the system crashed.
17 percent experienced delivery problems - either the
item was delivered late, damaged, never at all, or the
wrong item was sent.
15 percent couldn't find what they wanted.
Despite these failures, last year's online holiday shoppers
remain enthusiastic about the upcoming holiday season.
Eighty-eight percent intend to buy as many or more gifts
online this year as they did last year, and they also
expect to spend more. In 1999, the average online shopper
spent $170 on holiday gifts, this year, those same consumers
expect to spend $240.
"This year, more consumers will be doing their
holiday shopping online - with up to 70 percent of the
online population in the U.S. indicating that they are
considering buying gifts over the Internet this season," said
Lori Iventosch-James, Director of e-Commerce Research
for Harris Interactive. "Online retailers need to
make the most of this enormous opportunity."
While holiday online shoppers expect to spend 22 percent
of their holiday budgets online, the Internet will also
influence how they spend the rest. Two-thirds say they
will use the Internet to compare prices before they buy
an item from a store. Even among the online population
who do not plan to purchase online, more than a quarter
will use the Internet to compare prices, review product
information, and generate gift ideas before they head
out to the stores.
"The impact of the Internet is reaching beyond
the online channel and is weaving its way into the consumer's
entire decision-making process," said Iventosch-James. "Having
an online presence is becoming an absolute must for retailers
- particularly for the holiday season - as it increases
the likelihood that a consumer will purchase from any
of a retailer's sales channels."
The BCG/Harris Interactive research shows that this
year's holiday online shoppers will more closely resemble
the population at large as the education gap and the
income disparity between the two groups gradually disappears.
The hottest online categories-books, music, toys, clothing-more
closely reflect the leading off-line retail categories.
Almost half of this year's holiday online shoppers have
not bought holiday gifts over the Internet before, and
another 10 percent will be completely new to online shopping.
This first-time online shopper will be the most cautious
of all. "Newbies" will spend only 7 percent
of their holiday shopping budget online. Based on results
from the 1999 holiday shopping season, first time buyers
are almost twice as likely to be dissatisfied with the
shopping experience, and the penalties for this can be
high. A consumer who had a dissatisfying consumer experience
in the last holiday season will spend, in total, 40 percent
less online in the upcoming holiday season than a satisfied
consumer will.
According to the research, individual online retailers
that provide poor purchasing experiences will be punished.
Twenty-seven percent of consumers who experienced a purchase
failure during last year's holiday season said that they
would not return to the offending Web site to buy a holiday
gift this year; twenty-five percent said that they would
never return to that site at all. The stakes are even
higher for online retailers with off-line operations.
More than two-thirds of a multichannel retailer's online
customers also shop at that retailer's brick-and-mortar
stores or order from its catalog. Customers who experience
a dissatisfying online transaction may be deterred from
shopping through the retailer's other channels as well.
"High customer satisfaction over the holiday season
will not be achieved by providing free gift wrapping,
gift registries, and product recommendations," said
BCG Vice President Peter Stanger. "Nor will it be
driven by providing competitive pricing and online security
- all retailers have to offer this just to be in the
game. Holiday shoppers will be looking for retailers
who provide fast, reliable delivery, offer flexible and
easy returns, and never say that they won't be able to
ship an item because it is out of stock."
These findings were obtained from an online survey conducted
by The Boston Consulting Group and Harris Interactive
during October 2000. This quantitative survey was completed
by 5,226 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.
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