Eat That Candy and Check Your Gift Lists

More holiday shoppers will be spending a portion of their gift budget online in 2000, but they expect good customer service and low prices, according to a survey by Greenfield Online.

Greenfield surveyed 4,500 online consumers and found they would spend an average of $485 for holiday gifts. Mothers will be the most likely recipients for online gifts, will be the most popular Web destination, and 84 percent of those surveyed will shop at sites that belong to offline retailers.

The most important services that customers expect are the best price and guaranteed delivery, followed closely by customer service. Shipping charges are most likely to draw the ire of online shoppers: 61 percent say they have abandoned an online purchase because of shipping charges, and they are cited as the key reason people refuse to shop online.

Top Items Consumers
Intend to Buy Online
CD/Tapes 47%
Books 46%
Toys/Games 35%
Clothing 28%
Gift Certificates 26%
Source: Greenfield Online

A survey of 1,000 Web users conducted by Online Retail Partners (ORP) found that two-thirds of the respondents plan to do some holiday shopping online, and 55 percent said they plan on spending more than $1,000 for items purchased online. Demographically speaking, ORP found men more likely than women to shop online (72 percent vs. 64 percent); men were more likely to buy big-ticket items online; and Hispanics (74 percent) are more likely to shop online than whites (69 percent) or African-Americans (55 percent). US shoppers in the Northeast were more likely to do holiday shopping online than in other parts of the country.

More than half (52 percent) of ORP’s respondents said they will use the Internet to avoid long lines and crowds. Only 11 percent will shop online because they think it will offer a better price,and 10 percent believe online stores are more likely to have a product available. Five percent shop online to avoid paying sales tax.

Other findings from the ORP study include:

  • 66 percent of respondents report having experienced trouble completing an online sales transaction, and 18 percent said they encountered trouble on more than four occasions
  • 46 percent of respondents said that 5 to 7 days was a normal delivery time, while 26 percent were looking for delivery within four days
  • 66 percent believe customer service is better in offline stores; 15 percent said it is comparable on the Web

There remains enough interest and positive experiences in online shopping to allow eMarketer to predict online consumer revenues will reach $125.6 billion by 2004, a 240 percent increase from the $37 billion projected by year-end 2000. eMarketer puts 1999 consumer e-commerce revenue at $19.4 billion.

“People are getting online in droves, as the ease of Internet purchasing turns users and shoppers into buyers and regular buyers,” said Geoffrey Ramsey, Statsmaster at eMarketer. “Collectively, these purchasers will help drive e-commerce revenues through the roof.”

Those droves, according to eMarketer will total 64 million individual Internet users shopping online in 2000, and 55 million and 24 million households making at least one online purchase. eMarketer also predicts women to take the leading e-commerce, just as they dominate offline shopping.

The US held three-quarters of the world’s total e-commerce revenues in 1999, and while the US share will continue to drop as the rest of the world catches up, the US will still account for 59 percent of the revenue in 2003. Total worldwide e-commerce will grow at a compound annual rate of 93 percent from 1999 to 2003, according to eMarketer, while US growth will come at 85 percent.

Whether all this online shopping will improve the bottom line of many of the Net’s e-tailers remains to be seen. International Data Corp. (IDC) predicts more than $12 billion in online spending by US consumers in the fourth quarter of 2000, but says online retailers will struggle to turn a profit, and many will experience million-dollar losses. The companies that stand to benefit are those that provide services or logistics to e-tailers.

“The reward for going through the trouble of picking, packing, and shipping millions of holiday packages from expensive warehouses will be $200 million in aggregate losses for the online retail industry,” said Jim Williamson, senior analyst for IDC’s Internet Economy research program. “Even this impressive figure masks the staggering losses IDC anticipates will be sustained by many e-retailers.”

According to IDC, unprofitable e-tailers will collectively lose $700 million, while money-making firms will turn a joint profit of $500 million.

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