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NEW RECORDS PREDICTED FOR HOLIDAY E-COMMERCE

Source: InternetNews.com

Posted on October 22, 2001

      More than 106 million people will shop online in December, and they will spend a record $9.9 billion during the holiday season, an increase over last year's $6.9 billion, according to Nielsen//NetRatings and Harris Interactive.

      These estimates are based on historical online spending trends from the Nielsen//NetRatings and Harris Interactive e-commercePulse survey, which surveys approximately 35,000 Internet users monthly. It measures dollar spending across 13 key product categories: auctions, books, music, video, clothing/apparel, computer hardware, computer software, electronics, fitness/sports equipment, flowers/gifts/cards, health/beauty, home/garden and toys.

      "The number of shoppers for the 2001 holiday season is expected to grow 27 percent, equating to 21 million more people shopping on the Web compared to last year," said Sean Kaldor, vice president of analytical services, NetRatings. "This signals a solid outlook for e-tailers who will benefit from an even larger group of shoppers during the upcoming holiday season."

      The apparel category will see the highest amount of online spending this holiday season, the survey found, with nearly $2.5 billion in revenues estimated for November and December.

      "With the exception of travel, the apparel category has ranked consistently as one of the top revenue-generating sectors in e-commerce," said Kaldor. "Many successful clothing and apparel e-tailers have taken their proven catalog formula online and converted loyal catalog customers into new Web shoppers. Audience traffic growth will increase 48 percent during this shopping season as many online shoppers have grown more comfortable with buying clothing online without touching or trying on the garment."

      The books, music and video category, the original e-commerce category killer, is estimated to generate $1.7 billion in online spending. The auction category is expected to peak at more than $1.3 billion for November and December.

      Worldwide, GarterG2 expects online holiday shopping sales to reach $25.3 billion this year, a 39 percent increase over last year, despite an uncertain economic climate.

      "The increase in online holiday shopping sales will be driven by increases in online users, buyers, and most importantly, the experience level of online buyers, which our research indicates is the single most important predictor of online spending," said Mike Cruz, senior analyst for GartnerG2.

      In North America, where the Sept. 11 attack worsened existing economic uncertainty, GartnerG2 research found the events of Sept. 11 will have a minor impact on planned spending. From Sept. 26 to Oct. 7 GartnerG2 surveyed 16,449 U.S. respondents to gauge how inclined they are to shop online this holiday season. Of those who shopped online last year, 80.5 percent said they are inclined to shop at the same rate online this year, 13.6 percent said they'll spend less online this holiday season and 6 percent said they'll spend more.

      But e-commerce is no longer entirely dependent on North America for its success. More than half (53 percent) of online holiday sales, or $13.4 billion, will be made outside of North America compared to 50 percent last year. While North America will continue to lead all regions in online holiday sales, the other regions are showing stronger growth rates.

      As of mid-2001, GartnerG2 found that more than 71 million U.S. adults had made an online purchase within a three-month period, a 23 percent increase from the previous year. As Web sites have increased the functionality and ease of use on their sites, GartnerG2 analysts said consumers are coming back to buy more online.

      "In 1999, many consumers were disappointed with the operational and customer service performance of online vendors. The result was that over half of those who bought gifts online in 1999 stayed away from holiday buying online in 2000," said David Schehr, research director for GartnerG2. "Satisfaction was much higher in 2000, with three-quarters of buyers saying they were very satisfied with their experience. This means there will be less attrition from those who bought online last year, and those returning this year are likely to increase their spending levels."

      The worldwide e-commerce market is also continuing its trend of mirroring North American growth. For example, growth in the number of Web users has been paralleled by growth in the number of e-tailers. In Europe, there has been a rapid increase in brick-and-clicks retailers coming online and improving their proposition in 2001. In the Asia-Pacific region, local retailers in early Web adopter markets (Australia, New Zealand, Hong Kong, Singapore, South Korea and Taiwan) have begun to develop multichannel sales and marketing models, including some direct selling of products and services on the Internet.

      "In Europe, e-tailers continue to improve their Web site functionality by offering stock checking, order tracking and keeping their customers informed by e-mail," said Gill Mander, business analyst for GartnerG2 Europe. "More flexible delivery times and new delivery methods are also encouraging customers to buy online."

      While much of the attention focused on the approaching holiday season has been devoted to economic uncertainty and the impact of war, the GartnerG2 research points to the convergence of several factors that could lead to a healthy holiday season, at least for the online sector.

      "In Asia-Pacific, retail banks, card companies and domestic consumer portals are increasingly active in promoting and fostering Web consumption through site certification and extended customer loyalty programs," said Lane Leskela, research director for GartnerG2 Asia/Pacific. "Consumers here are also drawn by the availability of specialty items on the Web that are in low supply in the buyers' local markets. The fourth quarter has also increasingly become a holiday shopping season in Asia-Pacific. Christmas has penetrated the local culture of many non-Christian societies in the region as a family and friends gift giving celebration."




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