Online retail and travel sales from the 2001 holiday season will reach approximately $11.9 billion, according to Jupiter Media Metrix. That would represent an 11 percent increase over last year’s $10.8 billion.
Online shopping will see slower growth this holiday season, but Jupiter expects to see more people shopping online (46 million in 2001, up from 36 million in 2000) and consumers allocating a greater percentage of their holiday budget to online shopping.
“As traditional retailers brace for a holiday shopping season fraught with uncertainty, online retailers are facing quite the opposite — the first fairly predictable holiday season,” said Ken Cassar, Jupiter senior analyst. “The attacks of Sept. 11 will in fact have a net zero impact on online retailers. Because fewer Americans will travel via air this year, and those that do will be less likely to carry armloads of packages through tight airport security, there’s an increased likelihood that consumers will buy from online and catalog retailers. However, any benefits that this creates will be offset by the negative economic impact of the attacks.”
An Jupiter Consumer Survey from October 2001 found that only 14 percent of those that plan to buy gifts online this season believe they will spend less than 10 percent of their budget online, compared with 18 percent in 2000 and 61 percent in 1999. But even though online holiday budget allocation is increasing, spending per person is decreasing because the online population is less affluent this year and the weak economy is causing holiday budgets to shrink.
|Top Online Purchases
2001 Holiday Season
Consumer Bought/Planning to Buy
|Clothes & Shoes
|Source: Jupiter Media Metrix
The 2001 holiday season will also see a demographic shift. For the first time, women as a group will spend more than men. Women will also account for more than half (53 percent) of the total online holiday buying population. The average holiday spending per male will remain higher due to purchases in more expensive price categories such as consumer electronics and PCs.
The online merchant landscape has certainly changed, as many of the dot-coms have disappeared in favor of traditional brands, but consumers will buy from the same gift categories this season as last. According to Jupiter, top products consumers have already bought or plan to buy online this season include: books (40 percent), clothing and shoes (30 percent), toys (29 percent), videos (20 percent) and music (28 percent). The category with the largest projected drop this year compared to last is computers and computer accessories. Last year, 24 percent of consumers said they would buy computers or computer accessories online — this year that figure is only 18 percent. The weakness in the computer market has dual causes: the weakened computer sector, which has been exacerbated by the recession; and an increasingly mass-market online buyer who is less interested in technology.
“The slowdown in online retail sales growth this holiday season is actually a blessing in disguise. For the first time, online holiday sales will be somewhat predictable. In order to capitalize, online retailers must appropriately scale their businesses to balance high consumer expectations with their own need to show a profit,” Cassar said.
|Important Factors in Online Shopping
The keys to a successful holiday season for those selling online will once again revolve around customer satisfaction. Providing the customer with convenience will again be the key. According to research by GartnerG2, 81 percent of online consumers value convenience when making a purchase online compared with 33 percent who value price savings.
“In a down economy, businesses might conclude that the emphasis on lower price would increase. We found exactly the opposite,” said David Schehr, a GartnerG2 analyst. “This is not to say that online merchants should begin to raise their prices, but alternatively, they should focus their energy on getting the customer in and out of the site as quickly and efficiently as possible.”
Convenience-related issues (including speed of use and ease of access) are the dominant motivating factors among respondents who purchase online; only 33 percent of the respondents feel that getting better prices is an important driver to buying on the Internet. Almost half (49 percent) of the Gartner respondents feel that only convenience is an important factor of online buying, compared to 2 percent who feel that just price is important; 30 percent of the respondents feel that both convenience and price are important. According to the research, 59 percent of online buyers limit their purchases to the handful of sites that they find familiar and comfortable. These online buyers save time in two ways: limiting the search time to find a retailer and speeding up the buying process through familiarity with the site structure and operation.