E-Commerce: To Slow Down or Not to Slow Down?

The growth of Internet commerce is accelerating and shows no signs of letting up, according to research by International Data Corp. (IDC). IDC predicts that by the end of 2000, 29 percent of people who go online will purchase a good or service, and that percentage will swell to 38 percent by 2003.

Not only is the number of Web purchasers going up, according to IDC, but so is the size of the average transaction. When they add all this up, IDC predicts $1.6 trillion being spent on Internet commerce in 2003.

“This increased likelihood to buy will be driven by greater availability of products, improved buyer confidence in security, and enhanced local language sites for international buyers,” said David Emberley, a research analyst with IDC’s Internet Commerce Market Model™.

Much of the forecasted increase will come from online shoppers outside the US, the current e-commerce capital of the world.

“The US currently dominates e-commerce, but this will be the last year it accounts for the majority of Web spending as the number of international buyers increases and international business-to-business Web transactions become more commonplace,” Emberley said.

According to IDC, the US share of Internet commerce will plunge from 62 percent in 1999 to 48 percent in 2001, which may explain why Greenfield Online has found that the percentage of online consumers who shopped and purchased online was down during the first quarter of 2000 when compared with one year ago.

Online Activity
Shopped April 2000 April 1999
86% 78%
Purchased 70% 74%
Source: Greenfield Online

Greenfield’s Online Shopping Index VIII study did find that the percentage of those currently purchasing online who plan to purchase more in the future varied only slightly in the last 12 months (58 percent in April 2000 vs. 59 percent in April of 1999).

More women are joining the e-commerce ranks, and Greenfield found evidence of their purchasing power among the top categories purchased online. Health/fitness/beauty products have broken into the top five, displacing computer hardware. The ratio of men to women who shop online (or who purchase online) is now 68 percent female to 71 percent male vs. a year ago when the balance was 70 percent female to 77 percent male. Health/beauty/fitness products are purchased by 20 percent of the female respondents vs. 10 percent of the male respondents.

According to Greenfield, most consumers (67 percent) are being attracted to online stores by ads that offer something for free. Discount prices (47 percent), contests (43 percent), and brand name (39 percent) are also powerful influencers in driving traffic to online shopping sites.

Greenfield also found that click-and-mortar operations (those with online and offline outlets) appear to be winning the battle for consumer confidence. In fact, 43 percent of online consumers are more comfortable purchasing from online retailers that have an offline store nearby. Only 9 percent, however, have returned an item purchased online to a nearby offline retail outlet while 32 percent have purchased from and returned an item to an online store.

BooksApril 2000April 1999Change

Top 5 Items Purchased Online in Past 90 Days
26% 26% 0
CDs 24% 24% 0
Computer
Software
18% 21% -3
Health/fitness/
beauty
14% 5% +9
Clothing 14% 11% +3
Source: Greenfield Online

A survey of more than 500 respondents who had contacted customer service at e-commerce sites done by Harris Interactive found that customer service methods involving direct human interaction (e.g., phone) had a more positive impact on the overall online shopping experience than just email messages or Internet service responses. The survey also found that consumers are generally satisfied with the customer service at e-commerce sites and that excellence in customer service has a notable impact on customer loyalty and spending.

“The good news for e-commerce retailers is that the majority of consumers who contact customer service are satisfied with the experience. As a result, they end up spending more and are more likely to purchase from the site again,” said Lori Iventosch-James, Director of E.Commerce Research at Harris Interactive. “But the key to providing customer service that keeps customers coming back is timely handling of customer requests. Consumers who do business over the Internet expect Internet speed when it comes to service.”

The survey found online consumers are willing to give sites up to a day to respond to and resolve their requests. Immediate response, of course, is best, but satisfaction with customer service and likelihood to repurchase from the site are still high as long as the issue is handled within 24 hours. Seventy percent of consumers whose service request was responded to within 24 hours gave the site a high satisfaction rating on customer service and 80 percent said they would be very likely to repurchase from the site. Similarly, 75 percent of consumers whose requests were resolved within 24 hours gave the site a high satisfaction rating on customer service, and 85 percent said they would be very likely to repurchase from the site. Greenfield’s Shopping Index VIII was conducted between April 17 and April 25, 2000, with a sample of 3,000 respondents. The data was weighted to represent the Internet population in terms of age, gender, and region.

The timeliness of the resolution varies by the reason for contacting customer service, the survey found. The earlier in the sales process the issue arose, the more quickly it was resolved. The majority of requests for pre-sales assistance (56 percent) were resolved immediately, but just 17 percent of requests for post-sale support were handled that quickly.

“While customer service overall is good, e-commerce sites stand to benefit from focusing on assistance after the sale,” said Iventosch-James. More than 50 percent of customers who contact customer service do so for post-sales assistance, yet more than two-thirds of inquiries concerning returns and more than half regarding delivery were not resolved within 24 hours.

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