Holiday Sales Could Lift Online Spending

Consumers will spend $6 billion online during the months of November and December 1999, up from $3.1 billion spent during the same period in 1998, according to research by Jupiter Communications.

Of the $6 billion Jupiter expects to be spent online, $5 billion will be spent on products, and $1 billion will go toward travel services.

According to Jupiter, the $6 billion figure is just a fraction of the opportunity online shopping will present. By 2003, online shopping is expected to grow to $78 billion by 2003.

Retailers’ success depends on establishing positive relationships with new online buyers now in order to lock in a sizable proportion of future sales, Jupiter found. Ten million online users will begin shopping online in 1999 and most of these will make their first purchase during the holiday season. Meeting and exceeding the high expectations of these new online buyers in the fourth quarter of 1999 will have an effect far beyond holiday sales, including securing the wallet share for future online shopping. According to Jupiter, retailers’ success depends on establishing positive relationships with new online buyers now in order to lock in a sizable proportion of future sales.

“The 1998 holiday season really represented an inflection point in the digital commerce evolution,” said Ken Cassar, a Jupiter analyst. “Several category leaders were able to successfully parlay their strong performance in the fourth quarter of ’98 into strong ’99 performance, and we attribute this to the momentum that online retailers created through positive experiences with online users.”

Many new shoppers will make the leap and buy items online during the holiday season because it is a period when their time to shop is more limited.

“If consumers are satisfied with an online shopping experience that may have been initiated because of time constraints, and have registered their shipping and billing information, they will be far more likely to return and shop after the holidays,” Cassar said. “Successful holiday transactions will ripple down through the years to come.”

But what if consumers aren’t satisfied with their holiday spending experience? A Jupiter consumer survey of more than 2,100 online shoppers fielded immediately after the 1998 holiday season found that the overall level of online shopping satisfaction dropped from 88 percent in the second quarter of 1998 to 74 percent in the fourth quarter of 1998.

A rush of online shoppers during the online season could result in stress on the infrastructure of e-commerce sites, leading to site failures, inadequate customer service, and poor order fulfillment. As more mainstream consumers shop online, Jupiter believes they will be less forgiving and instead will look for alternative sites to find what they are looking for. In that case, a poor experience with online shopping could cost the Internet shoppers.

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