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STUDY: "NEWBIES" KEY TO U.S. E-HOLIDAY SALES

Posted on October 11, 2000

      Due in part to an influx of new e-shoppers, nearly 45 million Americans will do some of their shopping online this holiday season, according to a study released Tuesday by eMarketer.

      The New York City-based research firm is predicting that U.S. online holiday spending will reach $12.5 billion (US$), an increase of 71 percent from 1999's total of $7.3 billion. This online holiday shopping spree will push total U.S. e-commerce revenues to $37 billion for the year 2000.

      "A 71 percent boost over last year is certainly respectable, but we are done seeing growth rates in the 100 to 200 percent range," says eMarketer statsmaster Geoffrey Ramsey.

Average Spending

During this holiday season, 5.8 million Internet users -- representing 13 percent of the nearly 45 million online holiday shoppers -- will make their first online purchase. Though these first-timers are expected to spend less per person than more experienced shoppers, eMarketer predicts that the average shopper expenditure will rise to $280 overall, a 30 percent increase over last year's $215 average.

      "These newbies will be enticed to buy online for the convenience advantages of the Web -- like not having to deal with crowds, traffic and long lines," Ramsey said. Although individual Internet shoppers will be spending one-fifth of their holiday shopping budget online, as a whole e-commerce will account for only 1.5 percent of the anticipated total retail sales of $858 billion for the quarter.

      "Clearly, the Web has a long way to go before it captures a significant portion of the total retail pie," Ramsey said.

Upgraded Service

Despite last year's highly publicized service and delivery problems, eMarketer said that 78 percent of 1999's holiday shoppers were generally satisfied with their online buying experience and will return to the Web "in droves." Most will spend even more online this year. Even those shoppers who experienced horror stories -- and vowed never to return to the site in question -- will not give up online shopping all together.

      eMarketer believes that most e-tailers learned from their experiences last year and are determined to avoid making the same mistakes. Among the most frustrating problems for consumers one year ago, listed in order of customer frustration level, were out-of-stock merchandise, late or no delivery, poor Web site performance and navigation, and outrageous disguised shipping rates.

      "eMerchants are learning from companies like Amazon and the top multi-channel sellers how to use tools that keep customers informed and happy, rather than employing technology for technology's sake," Ramsey said.

      A survey released last month by Internet research firm IDC showed that e-tailers were scrambling to add customer-oriented features to their sites before the holiday shopping season. Among the features being added are interactive customer service, online order tracking and personalized content.

Earlier Predictions

eMarketer's prediction of $12.5 billion in online holiday spending tops earlier predictions from other research firms, which ranged from $9 billion to $11.6 billion.

      The Yankee Group is forecasting that Americans will spend $9 billion online during the fourth quarter, a 70 percent increase over last year's holiday spending of $5.2 billion.

      The slightly higher prediction of $11.6 billion, an increase of 66 percent over last year's $77 billion in holiday sales, was made by Jupiter Communications (now Jupiter Research).

      Gartner Group predicted that worldwide online holiday sales will reach $19.5 billion, an 85 percent increase over last year's holiday season revenue of $10.5 billion. The research firm also expects online spending in North America to increase by 69.9 percent, from $6.31 billion to $10.72 billion.

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