Study: Consumer Confidence in Internet Declines

Consumer confidence in the Internet dropped during the first quarter of 2002, the first such fall noted in Yahoo and ACNielsen’s quarterly survey.

According to the 1,000-person survey, which polls both Internet users and non-users to gauge national consumer confidence in the medium, the Internet Confidence Index dropped during the quarter to 111, down from 115 in fourth quarter 2001. It’s the first decline in the Index since it began in June 2001.

Among different age segments, Internet confidence fell anywhere between two points (ages 45 and above) to eight points (ages 18 to 24) except for the 35-to-45 age range, which remained constant.

Researchers at Yahoo and ACNielsen, a unit of Dutch research and publishing giant VNU , attributed much of the decline to concerns by heavy Internet users about e-commerce — especially customer service and product delivery. Thus, the results are likely a backlash from the increase in e-commerce spending seen during the last holiday season.

Additionally, all segments of Internet users reported heightened worries over credit card fraud and privacy issues, like data collection.

“What we are seeing here is the progression and growth of what consumers expect from the Internet, especially during the holiday shopping period,” said Jennifer Dulski, director of commerce marketing at Sunnyvale, Calif.-based Yahoo. “The more that people use the Internet to transact, the greater the possibility there is to have a negative experience at one point or another. This points to the need for businesses to address consumer concerns regarding delivery and customer service, as well as provide greater reassurance to shoppers about their Web site’s security in order to provide better experiences for their customers.”

Nevertheless, the quarter’s Confidence Index still ranks higher than both the second and third quarters of 2001, and researchers downplayed the decline.

“It is normal for an Index as broad and far reaching as this one to experience its first small decline,” said Travyn Rhall, managing director of New York-based ACNielsen International Research. “The Internet Confidence Index is still well above the launch baseline of 100, which indicates that overall Internet confidence of the average consumer is still relatively high.”

Additionally, several positive trends indicate that there’s a good chance for consumer confidence in the medium to bounce back next quarter. For instance, the Yahoo/ACNielsen survey found that more people intend to shop online during second quarter, with 51 percent of respondents planning to make an e-commerce transaction within the next three months, up from 47 percent in first quarter. However, total spending is projected to be $13.8 billion — about 5 percent less than had been projected for first quarter.

The study also found that more than 40 percent of Internet users say they routinely manage some aspect of their personal finances online. Twenty-six percent said they plan to use the Web for tax research this year, while 15 percent said they plan to file their taxes online.

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