Online Holiday Shoppers to Triple

The Third Annual Online Retailing Report by Ernst & Young projects a holiday shopping season that will see a huge increase in the volume of online shoppers and dollars spent online.

According to the survey of 1,200 online shoppers, the number of regular online holiday shoppers will almost triple from 1998. Last year, 23 percent of respondents did at least 10 percent of their holiday shopping online. In 1999, that number will be 67 percent, according to Ernst & Young.

The survey also found that consumers will do more of their shopping online. The number of people doing at least half of their online shopping will increase by a factor of five. In 1998, only 4 percent of online shoppers did at least 50 percent of their holiday shopping online; in 1999 that number jumps to 19 percent of shoppers. Conversely, the number of online consumers who have no plans to shop online during the holidays dropped dramatically, from 49 percent to 11 percent.

“Given this data, and considering the dramatic increase in the number of Internet sites and merchandise available, we are making some bullish predictions about 1999 online shopping figures,” said Stephanie Shern, Global Vice Chairman, Retail and Consumer Products for Ernst & Young. “We are projecting online sales for the holiday of $12 to $15 billion. Our estimate of total revenue for calendar year 1999 is $25 to $30 billion.”

The demographics Ernst & Young collected look like this:

“E-tailers are not just selling to early adopters anymore. They’re selling to consumers who are more like the general population,” said Tom Reynolds, National Director, Consulting Services, Retail & Consumer Products for Ernst & Young. “Just like brick-and-mortar stores, e-tailers have to build relationships with their customers. This relationship starts with marketing, but it develops through customer relationships and truly effective merchandising.”

The survey revealed that the top five categories for online buyers are unchanged from 1998, with favorite categories being computers and related products, books, CDs, toys, and video. The big Internet brands are also the most popular with consumers: Amazon.com, Barnesandnoble.com, CDNow, buy.com, and eToys.

“Focused categories with the broadest offerings like CDs and books will continue to lead the market this holiday season,” Shern. “The leaders are those who have built a strong brand, and backed it with the operating models to best serve the customer — meeting customer needs at both the front and back end.”

Looking forward to the new year, Ernst & Young predicts shoppers will be sold on the Internet shopping experience, providing a boost to online sales throughout the year. The survey’s respondents said they were most likely to shop online in the coming year for special sales/promotions (80 percent), birthdays (71 percent), replenishment of everyday items (34 percent), and Mother’s Day (34 percent).

The rush to make online purchases may have already started, according to the October online buying numbers from PC Data Online. The numbers show holiday gift staples, such as clothing, toys, and sporting goods moved up sharply in October.

PC Data tracks Web purchasing among US households using a proprietary sample that tracks both visitors and buyers to each Web site.

“Our October numbers confirm the jump in both shopping and buying in September was no fluke,” said Cameron Meierhoefer, Internet research analyst for PC Data Online. “Whether it’s a a response to the increase of dot com advertising on television and radio or a growing comfort with shopping online, Internet users in October spent more money and bought more diverse items on the Internet in greater numbers.”

The most popular sites have seen few changes from last month’s numbers, but a look at who has moved up the list shows signs of early holiday shopping.

“The big gains this month can be attributed to early holiday shoppers,” Meierhoefer said. “Jumps by Smartkids.com, eToys.com, and Fogdog.com clearly reflect that people have begun their holiday shopping.”

PC Data Online defines Internet retail sites as Web sites where visitors can actually purchase products. They include neither shopping domains that provide free downloads, product reviews, or purchasing incentives such as coupons, nor other types of e-commerce sites such as auction, travel reservation, or financial services sites.


Top 20 Web Retailers Among US Home Internet Users
E-Tailer Rank E-Tailer October Buyers
(000)
Reach
(%)
Unique Users
(000)
Buy Rate
(%)
Oct. Sept.
1 1 amazon.com 1,178 18.5 12,080 9.8
2 4 buy.com 389 3.9 2,545 15.3
3 5 ticketmaster.com 360 3.8 2,506 14.3
4 3 barnesandnoble.com 324 8.0 5,199 6.2
5 7 mothernature.com 253 2.9 1,888 13.4
6 2 drugstore.com 221 2.2 1,456 15.2
7 26 smarterkids.com 218 2.5 1,618 13.5
8 9 Planetrx.com 214 2.6 1,709 12.5
9 19 etoys.com 181 4.5 2,911 6.2
10 14 gap.com 164 1.9 1,267 12.9
11 10 gateway.com 161 3.7 2,445 6.6
12 8 enews.com 120 4.4 2,850 4.2%
13 20 staples.com 112 1.5 957 11.7
14 11 cdnow.com 97 7.9 5,149 1.9
15 24 fogdog.com 97 1.9 1,263 7.7
16 21 1800flowers.com 90 1.2 795 11.3
17 15 bigstar.com 88 2.2 1,411 6.2
18 12 chipshot.com 84 1.0 677 12.5
19 17 yahoo.com 74 56.2 36,733 0.2
20 27 compaq.com 55 2.0 1,320 4.2
Source: PC Data Online

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