Demographics Influence Online Spending

Research projects by Ernst & Young and IDC take a look at how people’s gender, age, income, and where they live influence where they shop online, what they buy, and how much they spend.

According to an online survey of 1,200 US Internet users by Ernst & Young, both men and women selected Amazon.com and Barnesandnoble.com, and CDNow as their favorite sites, but there is a vast difference in the sites selected after the top three. Men seem to favor sites that specialize in electronics, entertainment, and home/office supplies. Women turn to sites that feature health and beauty products, apparel, and online greetings.

Top E-Commerce Sites by Gender
Men			Women
Site	Percent		Site	Percent
Amazon.com	55%		Amazon.com	49%
Barnesandnoble.com	31%		Barnesandnoble.com	30%
CDNow.com	30%		CDNow.com	24%
Buy.com	25%		eToys.com	21%
Egghead.com	22%		Drugstore.com	20%
Office Max	16%		JC Penney	18%
Best Buy	15%		Buy.com	17%
Office Depot	14%		Disney	17%
eToys.com	13%		PlanetRX.com	17%
Reel.com	13%		Bluemountainarts.com	15%
Source: Ernst & Young

When asked to name their favorite online categories, both men and women selected computers, books, and CDs in varying order. Following these three primary categories, however, the sexes diverge. Men lean to purchasing small consumer electronics, videos and air travel, while women prefer health and beauty sites, as well as toy and apparel sites.

Favorite E-Commerce Categories by Gender
Men			Women
Category	Percent		Category	Percent
Computers	76%		Books	64%
CDs	60%		CDs	60%
Books	59%		Computers	57%
Small consumer electronics	44%		Health & Beauty	42%
Videos	38%		Toys	41%
Air Travel	34%		Women’s Clothing	39%
Magazines	31%		Children’s clothing	31%
Men’s clothing	29%		Videos	28%
Toys	29%		Magazines	27%
Hotel reservations	26%		Small consumer electronics	26%
Women’s clothing	21%		Air travel	24%
Health & beauty	19%		Flowers	21%
Sporting goods	19%		Men’s clothing	20%
Source: Ernst & Young

“While men and women may differ in their online shopping preferences, the good news is that more consumers are flocking to the Internet than ever before,” said Stephanie Shern, Global Director of Retail & Consumer Products for Ernst & Young. “What retailers can learn from these results, however, is how to adjust and focus their merchandising efforts according to their audience.”

According to the survey, women more than men bought children’s clothing (31 percent of women vs. 18 percent of men), women’s clothing (30 percent vs. 21 percent), health and beauty aids (42 percent vs. 19 percent), and toys (41 percent vs. 29 percent).

On the other hand, more men bought computers (76 percent of men vs. 57 percent of women), small consumer electronics (44 percent vs. 26 percent), videos (38 percent vs. 28 percent), men’s clothing (29 percent vs. 20 percent), financial investments (14 percent vs. 6 percent), and sporting goods (19 percent vs. 12 percent).

The survey also found that more men than women purchased travel-related services online. Men made more airline reservations (34 percent vs. 24 percent), hotel reservations (26 percent vs. 18 percent), and car rental reservations (18 percent vs. 10 percent).

In addition, more men (55 percent) than women (48 percent) participate in online auctions, and more men (58 percent) than women (39 percent) are considered “heavy buyers” spending more than $500 online in the previous year.

When it comes to age groups, more young people buy CDs and videos online, the study found. Seventy percent of people age 29 and under bought CDs online vs. 60 percent of 30-49 year-olds and 52 percent of those 50 and over. Additionally, 40 percent of those under 29 bought videos vs. 32 percent of those age 30-49 and 30 percent of those 50 and over.

Adults 60 years of age and older are the least likely to make spontaneous purchases online, according to Ernst & Young’s study. Eighty-eight percent of people under the age of 25 have made an unplanned purchase vs. only 60 percent of the 60-plus group. Adults over 60 also tend to stick to a few favorite sites. Those over 60 have made purchases from an average of nine sites, while those under 25 have made purchases from an average of 12 sites.

There are no real surprises in the Ernst & Young study when reviewing online purchases and income levels. As income goes up, so too do the number of of online purchases. Sixty-one percent of people making more than $100,000 made 10 or more purchases online last year, while only 32 percent of people with household incomes less than $30,000 made 10 or more purchases.

There was also a direct correlation between dollars spent online and household income. Eighty percent of people making $100,000 or more are considered “heavy buyers,” spending more than $500 in the past 12 months vs. only 29 percent of people making less than $30,000.

Top Five States for Consumer E-Commerce
State	1999 Spending (billions)
California	$5.9
Texas	$3.2
New York	$3.1
Florida	$2.3
Illinois	$2.2
Source: IDC

The most popular e-commerce categories with people making more than $100,000 were: computers 73 percent; books (67 percent); air travel (55 percent); and small consumer electronics (47 percent). Comparatively, favorite categories of people making less than $30,000 were: books (51 percent); CDs (59 percent); computers (65 percent); toys (29 percent); and videos (31 percent).

And what about geography? According to a report by International Data Corp. (IDC), Californians spend more on Internet purchases than consumers in any other US state. In 1999, they spent almost $6 billion. Texans were the next highest spenders with just more than $3.2 billion. The lowest online spenders were North Dakota ($41.6 million) and Wyoming ($41.5 million).

“It’s not surprising that populous states conduct the most online consumer commerce,” said John Gantz, chief research officer at IDC. “What is interesting is that when looking at the percentage of households online, many smaller states rank quite high. The Internet is a great leveler.”