No Shortage of Online Shoppers

Online purchasing and browsing are directly influencing consumer spending in traditional stores, according to a study by Andersen Consulting, which also found Internet users in the US estimate they will spend just over $300 online and an additional $300 in bricks-and-mortar stores as a result of online shopping.

“This holiday season, a Web site ceases to be a nice addition or an experimental marketing channel for leading retailers,” said Angela Selden, Andersen Consulting Retail practice managing partner, North America. “Instead, as e-tailers claim a significant share of the consumer wallet for gift purchases, it has become an imperative.”

The battle for consumers’ holiday dollars will be fueled by record numbers of shoppers who indicated they will be purchasing gifts online this holiday season. According to the research:

  • Fifty percent of Internet users in the US say they plan to purchase at least one holiday gift online, compared with 36 percent who reported having done so in 1999.
  • The percentage of Internet users who say they will not purchase holiday gifts online this year plummeted by almost two-thirds (from 33 percent in 1999 to 13 percent in 2000).
  • Nine out of 10 holiday shoppers (88 percent) will spend as much or more online for the holidays this year as they did in 1999 and approximately four in 10 (39 percent) survey respondents predict an increase in the amount of their online purchases over the 1999 holiday shopping season.
  • Eleven percent of respondents say they will buy more than half of all their gifts online.
  • Consumers indicate a willingness to make purchases beyond small ticket items. One-fifth (19 percent) plan to purchase an individual gift priced at $200 or more on the Internet, and six percent will make an online individual gift purchase of $500 or more.


Top Products Purchased
Online During Holidays*
Toys 31%
Books 29%
Clothing/
Apparel
24%
Music 25%
Electronics 17%
* Intended purchases
Source: Andersen Consulting

“We’re no longer looking at a slow-growing trend,” Selden said. “For the first time, retailers who haven’t created a compelling Web destination may be blindsided by stiff competition from the Internet this holiday season. Next year, the damage could be devastating. We believe that, for retailers, the die is now cast. To be successful, you must be a winner both off- and online.”

The research also found that holiday shoppers are not frightened away by the high-profile demise of several consumer-focused dot-coms (56 percent expressed no concern at all). Consumers said that past success with Internet holiday shopping, and faith that this season holds the same promise, is keeping them online. Asked about their online shopping during the 1999 holiday season, the vast majority (87 percent) say they were very or somewhat satisfied with that experience, and only 3 percent of respondents cite poor experience as a reason not to shop online this year. Almost one-half (47 percent) say they will only shop on Web sites they can trust.

While more than half of the respondents (55 percent) already have gift ideas in mind and will use the Internet to find exactly what they want, many will go to the Web seeking ideas. In fact, 65 percent report that they most often find the retail Web sites they use through search engines, and 38 percent say they do so by randomly surfing the Internet.

“Web sites that are not compelling have now met the ghost of Christmas past,” said Jeff Luker, Andersen Consulting retail practice managing partner, North America. “For traditional retailers, this provides an additional opportunity and threat: the means to shape consumers’ shopping lists — but only through capturing their interest and attention. This will require understanding their shifting needs and values. For example, our research indicates that banner ads, which were highly effective last year in attracting first-time shoppers to a site, have dwindled in effectiveness. In fact, only 22 percent of survey respondents cite banner ads as an influence in their use of the Internet for shopping this holiday season, but that is the same percentage who cite word of mouth as an influence. Thirteen percent of respondents mention TV and billboards, and six percent cite news reports. A retailer whose site fails to understand such trends and respond with innovation will find that the holiday season simply will not meet expectations.”

According to the research, barriers to Internet use appear to be falling. When respondents were asked why they would not shop online last season, they said that Web sites require too much information for purchases. That reason is far down this year’s list, following the general concerns of privacy and security — an indication that shoppers have become more familiar and comfortable with the process.


Reasons to Shop Online
Convenience and ease 73%
Avoiding crowds 69%
Saving time 63%
Reasons for Not Shopping Online
Like to touch/feel products 34%
Don’t want to pay for delivery 31%
Enjoy regular shopping 30%
Source: Andersen Consulting

While price is not a top-tier factor, once online, respondents consider it key in selecting an online retailer (41 percent of respondents cited finding lower prices over the Internet as a reason for shopping online) and as a basis for comparison shopping (63 percent said they would use the Internet to compare gift prices).

In what is perhaps another opportunity for retailers, wireless device usage for holiday gift purchase is making its debut this year. According to the survey, only 2 percent of respondents used a wireless device, such as a cell phone or PDA, to shop for and/or purchase gifts in 1999. That number increased to 6 percent this year, and nearly 27 percent volunteer that, if wireless devices offered the accessibility and product selection of the Internet, they would consider using them to make e-commerce purchases. Another 47 percent are not sure whether that would boost their receptivity to mobile purchasing.

“This is the next battle for leading-edge retailers to differentiate their business and capture the customer,” Luker said. “We believe that, as consumers become increasingly comfortable with m-commerce, the numbers of shoppers using wireless devices will expand dramatically. M-commerce holiday shopping will be a greater factor next year, and retailers need to begin planning now for that shift.”

The survey was conducted among 1,967 US residents 18 years of age or older who have shopped for products and/or services over the Internet. The survey was conducted entirely online.

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