Wednesday, February 14, 2001

Six Million Households Will Do Taxes Online

Forrester Research, Inc. projects that 6 million US households will prepare tax returns online this year, up from 2 million last year. The increase is owing to a combination of better online tax and financial service offerings and the growing comfort level of online users toward electronically assisted tax preparation.

This tax season, automated advances have made online tax preparation easier and more convenient for consumers. Prepopulated forms and automated downloads of W-2 and 1099 forms make it quicker and simpler to prepare taxes online. Over the next five years, Forrester predicts that financial firms, payroll providers, tax preparers, tax agencies, and other participants will be linked in real time over the Net in what Forrester calls tax eBusiness networks.

"2001 will be remembered as the year that the obstacles to easy, Net-based tax preparation were eliminated," said Jaime Punishill, senior analyst at Forrester. "And with the IRS on a paper-eradication crusade, the possibility of eliminating the need to send in paper copies of W-2s and 1099s may soon become obsolete. Financial consumers have also become quite savvy in their online usage. More than 15 million US households have transferred balances, paid bills, or traded stocks online, and another 5 million will do so for the first time this year, laying the groundwork for the online tax preparation boom."

What does this mean for online filers, vendors, and the tax industry? Filers will experience a faster and easier way to file online. Because all agencies will be connected in real time, filers will enter their information just once, instead of filling out various forms and sending them off to different locations. Vendors will attract more customers because of the simplicity and immediacy of filing online, coupled with tax assistance services. For the tax industry as a whole, Forrester estimates that 80% of tax filing will be done online by 2007.

Until now, taxpayers fell into two categories -- "soloists" (those who prepare their own taxes) and "delegators" (those who hire professionals to prepare their tax returns). But Forrester believes that many households are actually "validators" (those willing to do their own tax preparation and planning, but want someone to review their work and decisions).

"Validators are a whole new market," added Punishill. "A lot of people actually want to do their own taxes but just need someone to look over what they've done and give feedback. Services from the likes of H&R Block have already begun to target this consumer segment."

Men Outnumber Women on Personals Sites
Jupiter Media Metrix, a leader in market intelligence, today reports that traffic to personals sites - including Match.com, Oneandonly and Matchmaker among others - increased from 3.9 million unique visitors in January 2000 to 5.8 million in January 2001, a 46.9 percent increase. Traffic to sites specializing in flowers, gifts, greetings, cosmetics and e-cards also increased significantly.

"People are increasingly turning to the Internet as a tool and resource not only for shopping but also for communicating with other people through personals and e-greetings," said Heather Dougherty, Jupiter Research analyst. "Sites must turn this traffic into customer relationship-building opportunities and maximize revenue possibilities through advertising and product sales. With Valentine's Day fast approaching, companies that proactively direct visitors to their sites through e-mail promotions and special catalogues stand to benefit most from the holiday."

Key findings:
- Men dominate personals sites, comprising 58.3 percent of the audience in January 2001. However, women have a larger representation on such romance-related sites as Lovingyou.com and TheKnot.com, where they comprise 55.6 and 63.1 percent of the audience, respectively.

- Average daily unique visitors to 1-800-Flowers.com, RedEnvelope.com and VictoriasSecret.com increased by 98.9 percent, 100.0 percent and 13.6 percent, respectively (week ending Feb. 4, 2001 over week ending Feb. 2, 2000).

- During the same period, greeting card sites, such as AmericanGreetings.com and Hallmark.com, increased in average daily unique visitors by 17.5 percent and 37.3 percent, respectively (week ending Feb. 4, 2001 over week ending Feb. 2, 2000).

While men dominated personals site, women were the dominate visitors to sites dealing with flowers, fragrance, and ecards.

News Tidbits (appears every day on the front page)
- A lot of Deja users are expressing anger and disappointment at Google for killing the Deja service while it builds its own service. Tens of thousands of Deja users found themselves suddenly without a Web-based newsgroup service on Monday when Google acquired the Deja service. Instead of leaving the service operational while building its own, Google opted instead to close down the service until its own is complete. This has left many regular Deja users upset and could cost Google in both its reputation and retention of customers.