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Online Holiday Purchases to Grow Despite Growing Security Concerns

  |  November 30, 2004   |  Comments

Indications are that the online consumer market is beginning to mature.

More people are likely to shop online this holiday season, spending larger percentages of their holiday budgets online than ever before, according to a pair of holiday surveys from America Online and eBay.

Shoppers who research or make purchases online plan to spend over half (53 percent) of their holiday budgets online this holiday season. That means online shopping will overtake offline for the first time in the three years that AOL has conducted the annual study. The "Online Shopping Cities" survey asked 6,250 respondents about their holiday buying plans, finding that they planned to increase their online spending by an average of 6.5 percent. That translates to $295, as opposed to the $277 reported last year.

This increase is more pronounced when considered in light of the 3.6 percent decrease in overall holiday spending the researchers predict -- down to $558 in 2004 from $578 in 2003. The survey also found that the number of online shoppers who use the Internet frequently to comparison shop has increased 80 percent since 2002.

"What we have noted is that online behavior is growing more mature, with smaller year-over-year increases than we saw a few years ago," said Patrick Gates, senior vice president for e-commerce at America Online. "We have also seen a growing relationship between the number of people who do comparison shopping research online for sales they may make either on- or offline."

Ebay, in its report, supplied different metrics for the increase in online holiday gift sales. The number of respondents who plan to make at least one purchase online increased 9 percent over 2003. Notably, 20 percent of respondents said they planned to conduct 21-50 percent of their holiday shopping online this year. EBay conducted 1007 online interviews with a nationally representative sample of respondents.

Percent of Holiday Gifts Online - Last Year vs. This Year
What percentage of your holiday gifts did you buy online last year?
0% (nothing) 25%
Less than 10% 27%
10% - 20% 19%
21% - 50% 16%
51% - 80% 10%
81% - 100% 4%
What percentage of your holiday gifts do you anticipate buying online this year?
0% (nothing) 16%
Less than 10% 25%
10% - 20% 22%
21% - 50% 20%
51% - 80% 13%
81% - 100% 4%
Base: 1007
Source: ACNielson 2004

When asked their reasons for shopping online, 78 percent of respondents said that it saves them time; 51 percent said that it offers better prices; 43 percent cited a greater selection; and 40 percent said that online shipping was more convenient.

Why do you plan on shopping online?
Reasons Percent
Saves time 78%
Better prices 51%
More selection 43%
Easier shipping 40%
Ability to find a more personalized gift 28%
More information available about the products 20%
Other 8%
Base: 1007
Source: ACNielson 2004

The growing projections for online shopping this holiday conflict with a study released by TNS and TRUSTe, which finds that almost six out of ten consumers (58 percent) may reduce their online spending this holiday season due to concerns over identity theft, and other privacy concerns. That figure is up from the 49 percent reported by the study one year ago.

"The results show consumers have been paying attention to the onslaught of spyware, phishing, identity theft and credit card fraud," said Fran Maeir, executive director of TRUSTe.

AOL's Gates said that while there is a quantifiable increase in awareness about the dangers of such online spending perils, he feels this will not have the chilling affect on online spending growth predicted by the TRUSTe/TNS survey.

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