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Table Of Contents
1.01 Estimated U.S. Population Of Online Buyers 3.26 Online Market Share Of Top Internet And Click-And-Mortar
1.02 U.S. Online Buyers As A Share Of Active Internet Users Retailers (2000/2001)
1.03 U.S. Online Buyers vs. Active Internet Users By Month 3.27 Leading Websites By Buying Power Index Rating
1.04 Age Of U.S. Online Buyers 3.28 Leading Shopping Sites By Buying Power Index Rating
1.05 Age Of U.S. Online Buyers vs. Internet Users 3.29 Leading Portals By Buying Power Index Rating
1.06 Penetration Of Purchasing Online By Age Group In The U.S. 3.30 Leading Community Sites By Buying Power Index Rating
1.07 Individual Income Of U.S. Online Buyers
1.08 Education Of U.S. Online Buyers 4.01 U.S. Online Retailer Customer Acquisition Cost (1999-2001)
1.09 Education Of U.S. Online Buyers vs. U.S. Internet Users 4.02 U.S. Browser To Buyer Conversion Rate (1999-2001)
1.10 Ethnicity Of U.S. Online Buyers 4.03 U.S. Auction Site Browser To Buyer Conversion Rate (2001)
1.11 Marital Status Of U.S. Online Buyers vs. U.S. Internet Users 4.04 Incentives That Convert Online Shoppers Into Buyers
1.12 Primary Types Of Online Consumers 4.05 Incentives That Convert New & Repeat Customers Into
1.13 Top Concerns Of Online Consumers By Segment Buyers
4.06 Website Features That Convert Online Shoppers To Buyers
2.01 How Frequently U.S. Consumers Buy Online 4.07 Top Website Attributes Among Internet Users
2.02 Number Of Online Purchases Completed 4.08 Most Important Online Storefront Attributes
2.03 Number Of Online Purchases By Tenure 4.09 Important Online Storefront Attributes
2.04 Annual Spending Among Online Buyers By Tenure 4.10 U.S. Internet Users' Expectations For Merchandise
2.05 Spending For Online Purchases Assortment
2.06 Spending For Online Purchases 4.11 Top Online Storefront Attributes
2.07 Tenure Of U.S. Online Buyers 4.12 Interest In Personalization Among U.S. Internet Users
2.08 Tenure Of U.S. Online Buyers By Age 4.13 Frequency Of U.S. Internet Users Updating Personalization
2.09 Where U.S. Consumers Shop Preferences
2.10 How U.S. Internet Users Use The Web To Shop 4.14 U.S. Internet User Satisfaction With Online Shopping
2.11 How U.S. Consumers Gather Product Information 4.15 U.S. Online Shopper/Buyer Satisfaction With Customer
2.12 Seven Factors For Success In Online Retailing Service
2.13 How U.S. Internet Users Learn About Websites 4.16 U.S. Consumer Problems With Online Customer Service
2.14 How U.S. Internet Users Search For Products Online 4.17 U.S. Internet Users' Preferences For Resolving Customer
2.15 How Online Shoppers Get To Websites Service Issues
2.16 Internet Users Purchasing At The First Site Visited 4.18 Top Customer Service Features For Multi-Channel Retailer
2.17 Multi-Channel Online Shopping Activities Of U.S. Internet Sites
Users 4.19 Leading Consumer Barriers To Buying Online
4.20 Online Shopping Cart Abandonment Rates
3.01 U.S. Online Retail Sales Estimates (2001) 4.21 Shopping Cart Abandonment Rates For Selected Retailers
3.02 Total U.S. Consumer Internet Commerce (1999-2006) 4.22 Top Reasons U.S. Internet Users Abandon Shopping Carts
3.03 Total Worldwide Consumer Internet Commerce (2000-2004) 4.23 What Happens After A Shopping Cart Is Abandoned
3.04 U.S. Mobile Commerce Revenues (2000-2005) 4.24 Reasons For Not Purchasing Goods And Services Online
3.04a U.S. Mobile Commerce Revenues By Type (2005) 4.25 Why Internet Users Wait To Make The First Online Purchase
3.05 Quarterly Estimated U.S. Online Retail Sales 4.26 How Consumers Pay For Purchases
3.06 Online Retail Sales Share Of Total U.S. Retail Sales 4.27 Losses From Online Fraud At Internet Commerce Sites
3.07 U.S. Retail Sales By Month (2000/2001) (2000)
3.08 U.S. Online Retail Sales By Month (9/2000-9/2001) 4.28 Online Fraud At Internet Commerce Sites
3.09 Average U.S. Online Spending Per Household Per Month
(2000/2001) 5.01 Concern About Privacy Of Personal Information Provided
3.10 U.S. Online Buyers By Month (9/2000-9/2001) Over The Internet
3.11 Breakdown Of U.S. Online Retail Spending By Category 5.02 Concern About Website Access To Specific Personal
(2001) Information
3.12 U.S. Online Retail Spending By Category: Small Ticket Items 5.03 Personal Information Internet Users Are Willing To Share
(2000/2001) 5.04 Personal Information A Site Can Share In Return For
3.13 Average U.S. Online Spending Per Household: Small Ticket Customized Content
Items (2000/2001) 5.05 What Influences Internet Users To Share Information
3.14 U.S. Online Retail Spending By Category: Big-Ticket Items 5.06 Internet Users' Attitudes About Protecting Their Online
(2000/2001) Privacy
3.15 Average U.S. Online Spending Per Household: Big Ticket 5.07 Consumer Fears About Internet Crime
Items (2000/2001) 5.08 Concern About Misuse Of Credit Card Information Provided
3.16 U.S. Online Retail Spending: Top Categories (Q3-2000/Q3- Over The Internet
2001) 5.09 Concern About Misuse Of Credit Card Information Provided
3.17 U.S. Online Retail Spending Comparison: Top Categories Over The Internet By Age And By Gender
(Q3-2000/Q3-2001) 5.10 Comfort Level Providing Credit Card Information Over The
3.18 U.S. Online Buying Penetration By Product Category Internet
3.19 U.S. Online Buying Penetration By Product Category And 5.11 Comfort Level Providing Credit Card Information Over The
User Tenure Internet By Ethnicity
3.20 Types Of Online Purchases By U.S. Internet Users
3.21 Types Of Online Purchases By U.S. Teens
3.22 Estimated Revenue Mix For Amazon.com (Q4-2000)
3.23 Estimated Revenue Mix For eBay (Q4-2000)
3.24 U.S. Retail Auction Site Market Share (By Revenue)
3.25 U.S. Retail E-commerce Site Market Share (By Purchases)
6.01 U.S. Online Retail Sales: Q4/Holiday Period (2000/2001) 6.27 U.S. Consumer Satisfaction With Online Holiday Shopping
6.02 U.S. Online Retail Buyers: Q4/Holiday Period (2000/2001) Experience (1999/2000)
6.03 What Internet Users Do Online During The Holidays 6.28 Difficulties Experienced By Online Shoppers During Holiday
6.04 Where Do U.S. Consumers Plan To Shop For Holiday 2001 2000
6.05 Channel Allocation Of U.S. Consumers’ Holiday Shopping 6.29 Barriers To U.S. Internet Users Shopping Online For Holiday
Budget (2000/2001) 2000
6.06 How Long Holiday 2000 Online Buyers Have Shopped Online 6.30 U.S. Q4 Retail Sales Growth (1996-2000)
6.07 U.S. Online Holiday Buyers By Gender (1998/2000/2001) 6.31 U.S. Q4 Share Of Annual Retail Sales (1996-2000)
6.08 Share Of Holiday 2001 Gift Budget U.S. Consumers Plan To 6.32 Monthly Share Of U.S. Retail Sales (2000)
Spend Online 6.33 Growth In U.S. Retail Chain Store Holiday Sales (1996-2001)
6.09 Share Of Holiday 2000 Gift Budget U.S. Consumers Spent 6.34 Monthly Share Of U.S. Online Retail Sales (2000)
Online 6.35 Average Amount Spent Online In The U.S. During Q4-2000
6.10 Holiday 2001 Online Spending Plans Among U.S. Internet 6.36 Median Holiday 2000 Gift Budget Among U.S. Youths
Users 6.37 Holiday 2000 Online Spending By U.S. Youths
6.11 Share Of U.S. Consumers Who Plan To Spend The Same Or 6.38 Average Q-4 Online Spending Per U.S. Household Per Month
More Online During Holiday 2001 By Category (2000/2001)
6.12 When U.S. Consumers Plan To Begin Shopping For Holiday 6.39 U.S. Q4 Online Retail Spending By Category: Small Ticket
2001 Items (2000)
6.13 Growth Of U.S. Online Holiday Shopping (1998-2000) 6.40 Q4 Share Of Total Online Retail Spending By Category:
6.14 U.S. Online Holiday Shoppers And Buyers (1999/2000) Small Ticket Items (2000)
6.15 Average U.S. Online Order Value For Holiday 1999/2000 6.41 U.S. Q4 Online Retail Spending By Category: Big Ticket
6.16 Top 5 Product Categories By Holiday Spending (Nov./Dec. Items (2000)
2000) 6.42 Q4 Share Of Total Online Retail Spending By Category: Big
6.17 What U.S. Consumers Plan To Buy Online For Holiday 2001 Ticket Items (2000)
6.18 Top 10 BizRate.com Holiday 2001 Gift Product Searches 6.43 Weekly Online Shopping Activity For Holiday 2000
6.19 What U.S. Consumers Plan To Buy Online For Holiday 2001 6.44 Weekly Aggregate Online Shopping Trips For Holiday 2000
6.20 Sources Of Holiday 2000 Gift Ideas For Online Shoppers 6.45 Peak Traffic Week For Online Holiday Shopping By Category
6.21 What Influences Holiday 2000 Online Shoppers 6.46 Fulfillment Time For Internet-Only vs. Click-And-Mortar
6.22 Why U.S. Internet Users Plan To Shop Online For Holiday Retailers For Holiday 2000
2001 6.47 Fulfillment Time For Select Online Retailers For Holiday 2000
6.23 Why U.S. Internet Users Shopped Online For Holiday 2000 6.48 Total Time To Delivery For Select Online Retailers For
6.24 Number Of Websites Patronized By Holiday 2000 Shoppers Holiday 2000
6.25 Where Online Buyers Shopped For Holiday 2000 6.49 Fulfillment Time For Last Minute Holiday 2000 Orders
6.26 U.S. Consumer Satisfaction With Online Holiday Shopping
Experience (2000)
Section I.
The Online Consumer
Population
40%
38%
35.6%
36%
34.8%
28%
Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.
2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001
Source: Nielsen/NetRatings, 10/2001
The number of U.S. Internet users who have purchased something online has
grown slowly -- but steadily -- throughout 2001, according to data from both
Nielsen/NetRatings and Forrester Research (see also 3.10). The share of online
buyers as a percentage of active Internet users -- individuals who have gone
online at least once during the last 30 days -- has generally remained
between 31-32% throughout 2001, so the actual number of online buyers has
expanded essentially in parallel with the overall Internet population. During the
first nine months of 2001, Nielsen/NetRatings estimates that the number of active
Internet users went from roughly 107 million to about 112 million in the U.S. while
the number of online buyers in the U.S. fluctuated between 33 million and 39
million per month.
110.8
Sep. 2001 38.6
112.6
Aug. 2001 37.1
112.6
Jul. 2001 35.2
112.9
Jun. 2001 35.3
113.7
May 2001 35.9
113.1
Apr. 2001 35.9
0 30 60 90 120 150
55 And Older
16.3% 18 To 24 Years
Old
13.1%
25 To 34 Years
Old
35 To 54 Years 24.7%
Old
45.9%
Source: GartnerG2, 6/2001
12.0%
55+ 16.3%
18.6%
53.0%
35 To 54 45.9%
44.3%
32.0%
25 To 34 24.7%
21.9%
3.0%
18 To 24 13.1%
15.2%
80%
60% 57%
53%
43% 45%
40%
20%
0%
18 To 24 25 To 34 35 To 54 55+
Source: GartnerG2, 6/2001
Although Internet users between 35 and 54 years old account for almost one-
half (46%) of all online buyers, only slightly more than one-half (53%) of them
have purchased anything online, according to Gartner Group. The highest
penetration for buying online is among Internet users between 25 and 34 years
old while the lowest is among 18 to 24 year olds.
A majority (58%) of online buyers earn $50,000 or less per year compared
with approximately 83% of the overall U.S. population. At the upper-end of the
income scale, 7% of online buyers have an income in excess of $100,000 versus
3.5% of the general population.
< $30,000
27%
No Response
4%
$100,000+
7%
$30K To $49K
$70K To $99K
31%
12%
$50K To $69K
19% Source: Ernst & Young, 2001
Some High
High School
School
Graduate
Other 3%
20%
6%
Doctoral/Medical
Degree
3%
Graduate/Law
School Degree
10%
Some College
4-Year College
36%
Degree
22% Source: Ernst & Young, 2001
36%
Attended College
34%
The penetration rate for online shopping among both African-Americans and
Hispanic-Americans is significantly less than the penetration rate for the overall
Internet population, according to the Cultural Access Group. An August 2001
report by the organization estimated that only 31% of African-Americans and 32%
of Hispanic-Americans had ever purchased anything online, which is less than
one-half the penetration rate for Internet users overall.
80% 74%
69%
59%
60% 54%
20%
0%
All Internet Users African-American Hispanic-American
Internet Users Internet Users
1.11 Marital Status Of U.S. Online Buyers vs. U.S. Internet Users
Percent of online buyers
Single/Other Married
59%
Online Buyers
41%
61%
Internet Users
39%
Netizens
Cherry Pickers
15%
26%
Variety
Seekers
16%
Brand Reliants
Time Savers 22%
21%
Source: Accenture, 2001
The population of online shoppers and buyers fall neatly into five distinct
segments, according to Accenture, with each defined by a unique set of
purchasing needs and preferences. The company has identified the following
groups and their respective characteristics:
• Cherry Pickers -- Bargain hunters who want a wide selection of brands and
a diversity of products but consider pricing the highest priority in their
shopping decisions. Cherry Pickers have little in common with each other
beyond their shopping preferences, however, the segment skews somewhat
towards the young -- 47% are younger than 35 -- and the educated -- 42%
are college graduates, which is higher than any other segment.
• Brand Reliants -- These individuals value competitive pricing but are equally
concerned with brand reputation and the privacy of their personal information.
• Time Savers -- The Time Saver considers speed and convenience most
important in making their shopping decisions. They will gravitate toward
websites that are fast, functional, and easy to use; the relative weighting of
these particular performance measurements are collectively almost three
times more important to them than pricing.
• Variety Seekers -- The Internet’s shoppers and browsers, they want a
comprehensive selection of reputable brands, broad product selection, and
customized offerings along with fast-loading pages. Among Variety Seekers,
pricing does not even make their top 10 list of considerations.
• Netizens -- These individuals are at home on the Internet, but also aware of
the risks in cyberspace so the security of their personal information is
paramount, followed by website speed and quality. Although pricing is among
the top 10 concerns of Netizens, it ranks down the list in eighth place.
97
79
Price Level 133
144
167
105
123
Brand Selection 75
86
126
104
121
Category Breadth 76
90
122
95
116
Brand Reputation 124
142
116
139
Customer Information 99
78
Privacy 143
113
116
108
Site Speed 130
103
106
101
106
Site Functionality 125
82
100
113
101
Interactive Experience 87
78
89
96
89
Site Ease Of Use 117
76
81
71
105
Brand Familiarity 74
126
81
94
Online/Offline 99
112
Integration 86
74
110
80
Site Personalization 78
67
72
60
75
Online/Offline Presence 90
78
53
Section II.
Online Consumer
Activities
The majority (61%) of online buyers complete no more than a few purchases
per year, according to the Gallup Organization. Surveys by the UCLA Internet
Project in May and July 2001 found that the average anticipated number of online
purchases for 2001 was 12. The UCLA surveys also found that Internet users
who had been online for five or more years expected to make 5-times more
purchases during the year -- an average of 20 online purchases -- than users who
had been online less than one year. These newer Internet users expected to
make an average of four online purchases during the same time period.
60%
60%
43%
40%
23%
17% 18%
20%
8% 9% 7%
3% 3% 5% 3% 1% N/A
0%
Once A Several Few Times About Less Often No Never
Week Times A A Year Once A Response
Month Year
Source: Gallup Organization, 4/2001
1 To 2
None 17%
12%
More Than 25
8%
3 To 5
26%
11 To 25
15%
6 To 10
22%
Source: Arthur Andersen, 3/2001
New Users (<1 year online) Very Experienced Users (5+ years online)
100%
94.7%
80%
68.6%
60%
40%
16.0%
20% 12.1%
5.3%
0.0% 0.0% 3.1%
0%
1 To 10 11 To 20 21 To 50 51+
Source: UCLA Internet Report, 7/2001
New Users (<1 year online) Very Experienced Users (5+ years online)
100%
79.1%
80%
60%
37.1%
27.3%
40%
19.0%
11.2%
8.0%
5.3%
4.1%
3.3%
20% 3.5%
1.1%
0.9%
0%
$0 $1 To $100 $101 To $201 To $301 To >$400
$200 $300 $400
More than three-quarters of all online buyers spend an average of less than
$100 per month on their purchases, according to estimates from Accenture,
Arthur Andersen, and the UCLA Internet Project. The UCLA surveys also found
that the amount spent by online buyers increases along with the amount of time
they’ve used the Internet (see 2.04).
Gartner Group has found that a significant variation in the amount spent online
also exists between age groups. The company estimates that buyers over 55
years old spent an average of $92 per month online during the first-quarter of
2001 compared to only $40 for buyers between 18 and 24 years old.
A survey of J.C. Penney shoppers conducted in 2001 by IBM found that the
average online purchase through the retailer’s website was $500 while the
average transaction in its department stores was $122. Individuals who shopped
through both the company’s website and the department stores spent an average
of $1,000.
No Purchases
13% Less Than $25
5%
$100 To $499
39%
Source: Arthur Andersen, 3/2001
More Than
$250 Per Month
Less Than $100
6%
Per Month
79%
$100 To $249
Per Month
15%
Generally speaking, the longer an individual has been using the Internet, the
more likely he or she is to purchase online. Gartner Group reports that less than
one-third of the individuals who started using the Internet during 2000 or 2001
had purchased anything online by mid-2001. Among Internet users who have
been online for four or more years, 62% were online buyers. The highest
penetration of online buying activity (65-66%) was among 25 to 34 year olds and
35 to 54 year olds who have been online since 1997 or earlier.
80%
62%
60%
51%
40%
40% 33%
24%
20%
0%
1997 Or 1998 1999 2000 2001
Before Year first used the Internet
18 To 24 25 To 34 35 To 54 55 Or Older
80%
66%
65%
60%
57%
55%
51%
60%
45%
40%
40%
39%
38%
38%
37%
31%
40%
30%
29%
23%
21%
17%
15%
20%
0%
1997 Or Before 1998 1999 2000 2001
Year first used the Internet
Source: GartnerG2, 6/2001
Among individuals who shop online, more than one-half (57%) indicated that
they shopped at retail stores less frequently since going online, according to a
survey by Ernst & Young. The survey also found that an average of 59% of the
online purchases by these individuals would have otherwise been made from
traditional stores and catalogs. Almost one-third (30%) preferred to shop at
websites of companies that also have a physical presence. Only 38% of online
buyers in the survey, however, were likely to shop online but purchase through
another channel.
A November 2001 survey by the Yankee Group found that 46% of U.S. Internet
users go online at least weekly to gather information about products they are
considering buying. The UCLA Internet Project reports that 65% of its respondents
have shopped online and then purchased the product(s) in a local store. Between
2000 and 2001, the number of Internet users who frequently shopped online and
purchased offline increased from 16% to 23% while the number doing so
occasionally declined from 59% in 2000 to 42% in 2001. Trade association
Shop.org reports that among the online shoppers it surveyed in mid-2001 who
patronized so-called tri-channel retailers, 34% had completed purchases through all
three of the retailer’s sales channels -- physical stores, online, and mail order
catalogs.
Women Men
89%
Malls/Dept. Stores
89%
33%
Catalogs
44%
30%
Internet
28%
7%
TV/Home Shopping
9%
Shop Online,
51%
Purchase Offline
Shop Offline,
9%
Purchase Online
Ninety-two percent of Internet users use the Web to shop either for or
purchase products and services, according to NPD Online Research. The
company also reports that those individuals who aren’t actually purchasing online
are nevertheless still influenced by what they see on retailers’ websites.
Retailers who simply measure online sales overlook the full benefit of a web
presence. Among occasional buyers -- those who have made only one or fewer
online purchases during the last six months -- 84% use the Internet to shop online
but they most frequently make their purchase offline.
8%
Browse Retail 36%
Website 39%
17%
29%
Use Online Price 34%
Comparison Tools 22%
15%
4%
Browse At Store Or 39%
Mall 36%
21%
6%
33%
Newspaper Ads 40%
21%
6%
46%
Word Of Mouth 39%
9%
The Yankee Group laid out in a March 2001 research report what they believed to
be the principal factors for success in online retailing. These factors include:
Gartner Group reports that brand value and past experience play a significant
role in Internet users’ choices about which sites they decide to patronize. The
company’s research has found that 59% of online buyers typically limit their
purchases to only a handful of sites that they find familiar and comfortable.
If Internet users are unsure about which website to visit when shopping online,
typing the desired product name into a search engine is the most frequently
mentioned method for determining where to go. Search engines and e-mail are
also the most common means of learning about new websites.
Banner Ad 48.3%
TV Commercial 41.4%
Magazine Ad 37.5%
Radio Ad 19.8%
Go Directly To
Don't Shop Online Store
Online 56%
12%
Begin At Online
Mall, Portal, Or
Search Engine
32%
Source: Know ledge Systems & Research, 5/2001
100%
89%
84% 81%
80% 76%
65%
60% 55%
40%
20%
0%
Books Toys Music Electronics Computers Travel
Source: Jupiter Media Metrix, 2001
Section III.
E-commerce Market Size
and Composition
IDC $81.4
CyberDialogue $41.0
Dataquest $39.3
BizRate.com $38.1
1) Estimate for North America. 2) Excludes travel, autos and prescription drugs
Source: As noted, 2/2001-9/2001
$200
$150 $130.3
$104.4
$100 $82.9
$63.9
$47.8
$50 $34.1
$24.1
$12.3
$0
1999 2000 2001 2002 2003 2004 2005 2006
Source: Jupiter Media Metrix, 5/2001
Estimates of U.S. online retail sales for 2001 range from $34 billion -- a
forecast that does not include travel expenditures and online auto sales, which we
would estimate at approximately $15 billion -- and $38 billion on the low end to
$108 billion on the high end. Estimates of online retail sales worldwide range
from $49 billion on the low end to $494 billion on the high end (see 3.03).
Jupiter Media Metrix predicts that online retail sales in the U.S. will grow by
approximately 40% per year in 2001 and 2002, which is down from about 100%
from 1999 to 2000. By 2005, the company expects the annual growth rate will
slow further to approximately 25%.
Almost one-in-four mobile wireless Internet users in the U.S. have completed
at least one purchase using a wireless device, according to Telephia. A five-
country survey by Accenture found that mobile wireless users in the U.S. were the
least likely to have Internet access, but they were the most likely to have made an
online purchase, with 12% having done so, followed by Germany (9%), Japan
(7%), the U.K. (6%), and Finland (5%). Forrester Research, however, reports
that less than one-in-ten (8%) users are comfortable with conducting wireless
transactions and 86% are either somewhat uncomfortable or not at all
comfortable.
$5
Advertising
$0.7 bn
$4
$3.3
$3
Shopping
$2 $1.7 $2.1 bn
$1 $0.6
$0.1 $0.2
$0.0
$0
2000 2001 2002 2003 2004 2005
Source: Jupiter Media Metrix, 9/2000
revenues reaching $1.0 billion during 2001 and expanding to $20.8 billion in 2004.
Ovum comes in on the high end of m-commerce forecasts, predicting almost $70
billion in global revenues in 2005.
M-commerce revenues in North America are expected to lag significantly
behind those in Europe and Asia. Jupiter predicts that revenues in the U.S. will
increase from approximately $10 million in 2000 to $3.3 billion in 2005. In 2005,
the company expects shopping to account for $2.1 billion in revenue followed by
advertising ($0.7 billion) and paid content ($0.5 billion).
Q3-2001 $7.472
Q2-2001 $7.458
Q1-2001 $7.592
Q4-2000 $8.881
Q3-2000 $6.898
Q2-2000 $5.982
Q1-2000 $5.526
Q4-1999 $5.266
Q3-2001 0.95%
Q2-2001 0.92%
Q1-2001 1.04%
Q4-2000 1.09%
Q3-2000 0.89%
Q2-2000 0.77%
Q1-2000 0.77%
Q4-1999 0.67%
The U.S. Department of Commerce began tracking online retail sales in late
1999. The estimates are based on monthly surveys of approximately 11,000 retail
establishments in the U.S., excluding travel and ticketing agencies and financial
2000 2001
$170.59
January
$158.69
$166.18
February
$164.73
$186.60
March
$183.88
$186.06
April
$178.78
$198.79
May
$190.75
$192.12
June
$187.87
$187.43
July
$182.89
$198.88
August
$191.65
$180.53
September
$183.23
$191.34
October
$186.55
N/A
November
$198.71
N/A
December
$243.26
$3,086
Sep. 2000
$4,221
$3,703
Oct. 2000 $4,212
$4,788
Nov. 2000 $6,394
$7,223
Dec. 2000 $6,165
$3,780
Jan. 2001
$3,044
$3,390
Feb. 2001
$3,358
$3,517
Mar. 2001 $3,512
$4,489
Apr. 2001 $4,286
$5,383
May 2001 $3,928
$5,299
Jun. 2001
$3,208
$4,932
Jul. 2001
$3,979
$5,562
Aug. 2001 $4,043
$4,743
Sep.2001 $3,971
$4,600
Oct. 2001 $3,634
$5,300
Nov. 2001
$4,931
2001 2000
$202.59
January
$228.88
$178.20
February
$247.89
$228.92
March $263.07
$256.18
April
$273.18
$249.29
May
$265.13
$288.20
June
$246.62
$290.01
July $270.27
$280.41
August
$272.69
$272.42
September
$261.66
$268.33
October
$264.86
$285.34
November $292.28
$308.34
December
N/A
The number of online buyers per month has grown by less than 10% during
the first nine months of 2001, according to data from both Nielsen/NetRatings and
Forrester Research. Over the course of 2001, estimates of the number of online
buyers from both companies have tracked very closely with each other.
30.9
Sep. 2000
40.1
30.9
Oct. 2000 41.4
31.9
Nov. 2000 57.0
36.1
Dec. 2000
51.8
37.8
Jan. 2001 34.4
33.9
Feb. 2001
35.0
35.2
Mar. 2001
35.0
35.9
Apr. 2001 40.4
35.9
May 2001
38.3
35.3
Jun. 2001
33.9
35.2
Jul. 2001
38.1
37.1
Aug. 2001 38.3
38.6
Sep.2001 39.4
0 20 40 60 80
Travel expenditures accounted for almost one-third (31%) of all online retail
spending during the first 10 months of 2001, according to Forrester Research.
Outside of the travel sector, the next-largest consumer categories for online
spending were computer hardware -- accounting for almost one-in-ten of all
dollars spent -- apparel, and consumer electronics. The smallest consumer
categories among online buyers are garden supplies, appliances, tools and
hardware, and small appliances.
Software 3.28%
Books 4.16%
Music 3.19%
Videos 2.35%
Office Supplies 2.75%
Apparel 6.35%
Footwear 1.66%
Jewelry 2.33%
Flowers 1.43%
Linens & Home Décor 1.94%
Health & Beauty 3.14%
Small Appliances 1.23%
Toys/Video Games 3.03%
Other 9.44%
During the first 10 months of 2001, online retail sales of so-called small-ticket
items actually declined across more than one-half of the product categories
tracked by Forrester Research when measured against the comparable period in
2000. The only categories which have shown year-over-year growth for the
January to October period are apparel, footwear, jewelry, linens/home décor
items, small appliances, and sporting goods. The fastest growth occurred in the
sales of apparel and footwear, which expanded by 29% and 25% respectively.
The largest declines took place in the sales of software and books which each fell
by 16% between 2000 and 2001.
$1,446.02
Software $1,211.65
$1,818.82
Books $1,536.57
$1,326.35
Music $1,180.49
$911.10
Videos $868.95
$1,186.30
Office Supplies $1,018.18
$1,821.83
Apparel $2,347.27
$493.80
Footwear $614.90
Jewelry $716.18
$860.58
$528.32
Flowers $528.68
$622.34
Linens & Home Décor $715.26
$1,294.58
Health & Beauty $1,160.78
$445.13
Small Appliances $455.79
$1,223.38
Toys/Video Games $1,118.45
$610.99
Sporting Goods $684.56
$444.90
Tools & Hardware (1) $417.48
Prior ro May 2000, Garden category w as included in Tools & Hardw are
Source: Forrester Research
$42.02
Software
$43.34
$33.83
Books
$38.58
$30.29
Music
$33.42
$35.97
Videos $31.09
$53.01
Office Supplies $57.30
$64.76
Apparel
$69.69
$60.79
Footwear
$65.92
$63.57
Jewelry
$82.04
$47.82
Flowers $59.20
$70.04
Linens & Home Décor $62.98
$37.04
Health & Beauty $39.94
$60.05
Small Appliances
$73.22
$51.96
Toys/Video Games
$49.97
$73.43
Sporting Goods $72.28
$61.58
Tools & Hardware $77.29
$50.83
Garden Supplies $58.26
Jewelry, tools/hardware, and small appliances were the small ticket product
categories in which households that shopped online during October 2001 spent
the most money, according to Forrester Research. Two of these three product
categories also showed the most growth over the previous year, with the average
amount spent on jewelry increasing to $82.04 in October 2001, or 29% higher
than October 2000, and spending for tools/hardware increased 26% to $77.29 per
household in October 2001.
Among big ticket items, travel-related expenditures accounted for 35% of total
online spending during the first ten months of 2001, down slightly from 38% for
the comparable period in 2000. Outside of the travel sector, computer hardware
and consumer electronics were the largest big ticket product categories in
revenue terms, accounting for 10% and 7.4% of total big ticket spending
respectively.
$3,289.45
Computer Hardware $3,448.42
$1,770.24
Consumer Electronics
$1,849.83
$234.92
Appliances $295.51
$415.68
Furniture
$486.09
$1,236.38
Food & Beverages $981.12
$5,758.48
Air Tickets $6,270.57
$1,491.48
Car Rental $1,585.64
$3,121.41
Hotel Reservations $3,567.60
$3,336.03
Other $3,489.93
3.15 Average U.S. Online Spending Per Household: Big Ticket Items
(2000/2001)
Dollars per household
$191.78
Computer Hardware
$188.80
$138.82
Consumer Electronics
$140.72
$451.90
Appliances
$531.93
$243.02
Furniture
$193.16
$74.89
Food & Beverages
$80.26
$330.71
Air Tickets
$285.53
$186.53
Car Rental
$173.03
$228.84
Hotel Reservations
$197.93
$105.27
Other
$105.30
The top five product categories -- both in terms of online sales and market
penetration among online buyers -- are books, travel, clothing/apparel, and
music/videos/DVDs. Books, clothing/apparel, and music CDs are also the most
frequently purchased items among repeat online buyers, according to Taylor
Nelson Sofres (see 3.20).
Books 52%
Music/CDs 49%
Apparel 37%
Travel 29%
Toys 28%
Videos 27%
The UCLA Internet Project has found that the market penetration of different
product categories varies among online buyers depending on the amount of time
they have used the Internet. Much of the difference may be attributable to the
technical orientation of many early Internet users. For example, the market
penetration rate for computer hardware is four times higher among online buyers
with five or more years of Internet experience than it is among those who have
been online less than one year (17.2% vs. 4.5%). Veteran Internet users are also
more likely than new users to purchase books, electronics, and make travel
arrangements online, according to UCLA. Online buyers with less than one year
of Internet experience were more likely than veterans to purchase personal items,
such as children’s goods, sporting goods, hobby items. jewelry, and prescription
drugs.
40.8%
Books
10.9%
36.6%
Clothes
35.6%
24.7%
Music CDs
23.0%
20.7%
Travel
11.6%
Computers / 17.2%
Peripherals 4.5%
15.8%
Software / Games
3.0%
14.7%
Gifts
14.5%
14.6%
Electronics
4.2%
8.8%
Children's Goods
16.8%
8.4%
Sporting Goods
10.7%
5.9%
Hobby Items
7.5%
3.8%
Jewelry / Watches
6.6%
2.6%
Drugs
5.0%
Books 24%
Clothes 24%
Music/CDs 19%
Furniture/Furnishings 14%
PC Hardware 13%
Toys/Games 12%
PC Software 11%
Business Travel 8%
Movie/Theater Tickets 9%
Food/Groceries 8%
Sports Equipment 8%
Electronics 8%
Videos 6%
Stocks/Mutual Funds 5%
Jewelry 5%
Cosmetics 2%
Cars 2%
Other 18%
Boys Girls
100%
80% 75%
60% 52%
40% 43%
40% 36%
23% 26%
18% 21%
20%
7% 8% 5%
0%
Clothing Shoes Film Software Stereo Video
Equipment Games
Source: Harris Interactive, 2000
Books 35%
Electronics 20%
Music 15%
Video 14%
DVD 4%
Software 3%
Computer/Video Games 3%
Toys & Games 2%
Tools & Hardware 1%
Lawn & Patio 1%
Kitchen Products 1%
Camera & Photo 1%
Collectibles 22%
Sports 14%
Automotive 10%
Antiques 8%
Books, Movies, Music 7%
Jewelry, Gemstones 6%
Photo & Electronics 6%
Computers 5%
Pottery & Glass 5%
Toys, Bean Bag Plush 4%
Coins & Stamps 2%
Dolls, Figures 1%
Amazon.com and eBay are clearly the dominant players in the online retailing
space. The two companies together account for almost one-third (30%) of all
online retail transactions, according to Nielsen/NetRatings, and individually almost
four times more transactions than the next closest competitor. In the online
auction market space, Nielsen/NetRatings estimates that eBay accounts for
almost two-thirds (64%) of all revenues generated or more than 4-1/2 times its
closest competitor, uBid.com.
eBay.com 64.3%
uBid.com 14.7%
Egghead.com 4.0%
.
Amazon Auctions 2.0%
Amazon.com 15.1%
BMG.com 4.3%
BarnesandNoble.com 3.8%
ColumbiaHouse.com 3.7%
Half.com 3.1%
JCPenney.com 3.0%
Travelocity.com 2.5%
CDnow.com 2.2%
Southwest.com 2.0%
44%
March 2001
56%
50%
September 2000
50%
62%
March 2000
38%
Six of the ten leading websites -- in terms of their relative Buying Power Index
(BPI) ratings -- are in the travel sector and the balance are shopping sites
serving both consumers and businesses. The BPI is calculated by comScore
Networks and it measures the total dollars spent online by the average member
of a site’s audience, indexed to the total online dollars spent by the average
Internet user. For example, a BPI of 200 would mean the average visitor to that
site spends twice as much online as the average Internet user.
Section IV.
Online Merchandising and
Customer Service
The cost of acquiring new online customers has declined steadily since 1999,
according to Boston Consulting Group and Shop.org. Among 79 online retailers
surveyed by the organizations, the average cost to acquire a new customer
declined by 60% between Q1-2000 and Q1-2001, from $45.00 to $18.00 each.
Customer acquisition costs have continued their decline throughout 2001,
according to both organizations, averaging just $12.00 during the third quarter.
During 2000, Boston Consulting Group also found a significant difference in
customer acquisition cost between companies operating in the various retail
channels, with Internet-only retailers spending 156% more than the overall
average while click-and-mortar retailers and catalog merchants spent 3% less
and 66% less than average respectively.
$100
$80 $71.00
$60
$45.00
$40.00
$35.00
$40
$20.00 $23.00 $18.00
$20 $14.00 $12.00
$0
Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3-
1999 1999 2000 2000 2000 2000 2001 2001 2001
Source: Boston Consulting Group/Shop.org, 2001
5.0%
4.0%
3.0% 2.6%
2.3% 2.3% 2.2%
1.9% 2.0%
2.0% 1.8%
1.5%
1.0%
0.0%
Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3-
1999 2000 2000 2000 2000 2001 2001 2001
Source: Boston Consulting Group/Shop.org, 2001
eBay.com 22.5%
uBid.com 11.0%
Egghead.com 8.0%
Not Important
Somewhat Important
Very Important
3%
Free Shipping 28%
69%
3%
Price Discounts 30%
67%
6%
Improved Product Selection 39%
55%
8%
Ability To Return Items To Retail Store 43%
49%
9%
Guaranteed Delivery Date 43%
48%
10%
Faster Delivery 46%
44%
15%
VIP Customer Service 48%
37%
24%
Contests, Prizes, Giveaways 47%
29%
24%
Loyalty/Rewards Programs 51%
25%
34%
Personalized Information 46%
20%
58%
Free Newsletters 31%
11%
4.05 Incentives That Convert New & Repeat Customers Into Buyers
Percent of Internet users
Online coupons and free or discounted shipping are among the most effective
incentives for converting shoppers into buyers, according to a BizRate.com
survey conducted during 2000. Although guarantees on pricing, product, and
overall satisfaction were mentioned as effective incentives by only 12-17% of the
individuals surveyed by BizRate.com, 40% of the consumers surveyed by Jupiter
Media Metrix indicated that an efficient returns policy was an important motivator
and 37% said the same about “good customer service.” Loyalty programs served
as an incentive to buy among 22% of the Jupiter survey respondents but only 5-
6% of BizRate.com respondents.
PriceWaterhouseCoopers reports that a majority (77%) of Internet users have
used the search function on a website at least once while shopping online and
that most have been sufficiently satisfied with the results to use them on a regular
basis. In a ranking of the most important online shopping features, search
functionality was mentioned by 43% of online shoppers followed by product
information at 40%.
Most Internet users have little patience when it comes to navigating websites,
according to Knowledge Systems & Research, which found that 80% of the users
it surveyed in April 2001 would click a median of four times to find what they were
looking for before becoming frustrated. Once frustrated, only 13% bother to use
an online search function and 2% call customer service while 83% move on to
another site.
Generally speaking, however, Knowledge Systems & Research found that a
majority of Internet users think websites today are easier to navigate than one
year ago, with 58% indicating that they are somewhat easier to use and 25%
indicating that they are much easier to use. Only 2% of the users surveyed felt
that websites had generally become more difficult to navigate.
Convenience 77%
Speed 50%
Reliability 42%
Security 31%
Convenience and site usability ranked high among online buyers surveyed by
Odyssey over a six-month period last year. Considerations related to security
and pricing among those same individuals, however, ranked noticeably lower
than among groups surveyed by Accenture and Knowledge Systems & Research
earlier this year. Gartner Group has also found that among Internet users who
have completed online purchases, 81% valued convenience -- including website
speed and usability -- while only 33% valued price savings.
Although price is rarely the most important consideration for most online
buyers, they are also not entirely disinterested in what they pay for their
purchases. A March 2001 survey of Internet users by Knowledge Systems &
Research found that 90% said pricing was a very important aspect of online
shopping and 10% said it was somewhat important while one-half (53%) said
convenience was very important and 45% said it was somewhat important.
N/A
Price 10%
90%
2%
Product Selection 37%
61%
1%
Customer Service 40%
59%
2%
Convenience 45%
53%
Recognized Or 17%
61%
Known Retailer
22%
Fun 2%
Yes
54%
No
46%
personalization and 63% were more likely to register at a site that allows
personalization or content customization. In addition, the CyberDialogue survey
found that:
Monthly 24%
Quarterly 30%
Bi-annually 15%
Annually 9%
Never 7%
The majority (70%) of online shoppers and online buyers are generally
satisfied with the experience, including website features and usability, product
selection, pricing, and order fulfillment. Consumers, however, are split on the
quality of customer service, according to Knowledge Systems & Research, whose
surveys have found that almost one-in-four (23%) online shoppers and buyers are
either somewhat or very dissatisfied and another 20% are neutral on the topic.
Only 49% of survey respondents were satisfied with the current level of online
customer service.
When it comes to customer service shortcomings, the biggest complaints
among consumers included slow responses to their questions or problems and
the limited number of options they were frequently offered for contacting a
particular online retailer.
A survey of 502 online shoppers by Primus Knowledge Solutions back in 2000
found that the number one expectation among consumers was a timely response
to their questions; 14% of respondents also expected 24-hour availability from
online retailers.
Neutral
Somewhat/Very
15%
Satisfied
70%
Somewhat/Very
Dissatisfied
7%
Not Applicable
8%
Neutral Somewhat/Very
20% Satisfied
49%
Somewhat/Very
Dissatisfied
23%
Not Applicable
8%
27%
Form Reply Is Only
29%
Option
44%
31%
No Phone Number
25%
Listed
44%
25%
Slow Response
21%
Time
54%
Coupons For
Future
Purchase
4%
Free Shipping
5% Quick
Resolution To
The Problem
A Full Refund 71%
16%
Other
4%
Source: Know ledge Systems & Research, 3/2001
Return Online
Purchases At Retail 83%
Store
Pick-up Online
Purchases At Retail 59%
Store
Ability Of In-store
Staff To View Online 67%
Account Details
2001 2000
38%
Can't Try On For Fit
40%
44%
Credit Card Security
27%
Estimates of the rate at which online shopping carts are abandoned vary
widely between researchers, from a low of 25% from Accenture to a high of 78%
from Ernst & Young. Jupiter Media Metrix estimates the average abandonment
rate at approximately 66%, however, the company also reports that the rate
varies significantly between sites. An analysis conducted earlier this year (2001)
found that the abandonment rate varied from 25% at flower and gift retailer
FTD.com to 62% at the health and beauty products retailer drugstore.com.
Jupiter believes that the abandonment rate has been declining as less
trustworthy and poorly designed sites have gone out of business while the
surviving retailers have worked to improve their customer service and website
usability.
Drugstore.com 62%
Travelocity.com 55%
Expedia 44%
Egghead.com 44%
Buy.com 38%
FTD.com 25%
Purchased
Purchased Item
From Site At A
Offline
Later Date
17%
18%
Purchased Item
From Did Not
Competitor Purchase Item
26% At All
39%
Consumer concerns about security remain the top reasons why Internet users
who are not yet online buyers hesitate about taking the plunge. More than one-
third of non-buyers are concerned about providing their credit card details over
the Internet while one-in-ten are concerned about online fraud in general and a
lack of trust in online brands.
4.25 Why Internet Users Wait To Make The First Online Purchase
Percent of Internet users
Other 24.8%
The majority (51.3%) of consumers’ purchases during 2000 -- both offline and
online -- were paid for with a check, according to data from Visa USA, while one-
quarter (24.5%) was paid for with a credit card. General purpose cards such as
Visa, MasterCard, and American Express were used for 20.4% of expenditures
while proprietary cards -- department store, gasoline, etc. -- were used for
another 4.1%. Almost 18% of expenditures were paid for by cash and 7.6% by
“other” means, such as money orders.
Credit Cards
20%
Checks
51%
Proprietary
Cards
4%
Cash
17%
Other
8%
Source: Visa USA, Nilson Report, DRI; 2000
At the end of 2000, Visa USA reported that fraud losses for all types of credit
card transactions -- including both card present and card not present transactions
-- was $0.06 per $100.00. The fraud rate among card not present transactions
only -- which includes all e-commerce activity -- during the same period was
somewhat more than twice as high at $0.15 per $100.00.
The issue of fraud, however, cuts both ways, according to Boston Consulting
Group. The company reports that by 2000, more than one-in-ten (11%) online
buyers had at some point ordered and paid for products that they never received,
which was up from 6% in 1999.
61%
No Fraud Losses
72%
28%
Under 2% of Sales
20%
7%
2% - 5% of Sales
4%
2%
6% - 10% of Sales
2%
2%
Over 10% of Sales
2%
Occurs, but
with minimal
impact on
business
Somewhat of a
11%
problem, deal
with it regularly
2%
A substantial
problem
1%
Not a problem
86%
Section V.
Privacy and Security Issues
Among Internet Users
Privacy remains a significant issue among many Internet users, with 78% of
respondents in a June 2001 survey by Gallup indicating that they were either
somewhat concerned or very concerned about the privacy of both the information
they provided to websites as well as their activities while they were online.
Approximately one-half of Internet users surveyed by Arthur Andersen in
March 2001 expressed some level of concern about websites having access to
their address and online purchasing history. The use of demographic information
was less problematic, according to Arthur Andersen, with approximately one-
quarter to one-third of respondents expressing concerns about the sharing of
their age, size, and gender. The Gallup survey found that 65% of respondents
were either somewhat concerned or very concerned about providing their home
phone number, 53% mentioned their age, and 51% mentioned their address.
Less than one-in-four (22%) were concerned about sharing their e-mail address,
according to Gallup.
Very Somewhat
Concerned Concerned
28% 50%
No Answer
1%
Not At All
Concerned
3% Not Too
Concerned
18% Source: Gallup, June 2001
37%
My Address
14%
28%
My Purchase History
14%
19%
My Age
8%
19%
My Size
7%
17%
My Gender
7%
Although many Internet users are concerned about privacy and the security of
their personal information, an increasing number are willing to provide varying
levels of information in return for value-added services. CyberDialogue reports
that 51% of the online consumers it has surveyed either have no opinion about
one website sharing certain information with another website or they believe that
such sharing represents an effort to improve the relevancy and usefulness of the
interactive experience; the balance of respondents, however, viewed any sharing
of their personal information as an invasion of privacy.
Internet users were most receptive to the sharing of anonymous information
related to their interests and to the ads or promotions they’ve responded to. As
the nature of the information becomes more personal -- such as name, address,
income -- the level of support among consumers for sharing declines rapidly.
Name 88%
Education 88%
Age 86%
Salary 41%
A March 2001 survey of online buyers by Jupiter Media Metrix found that many
were willing to register with retailers and share personal information such as their
e-mail address. The survey also found that:
• 70% would consider registering to receive e-mails for new products and
special offers
• 68% would consider registering prior to making a purchase
• 50% would consider registering in order to store personal information on a
site for future use
• 41% would consider registering in order to receive physical mail
Internet users are most receptive to sharing their personal information with a
website if they have the ability to control how it is used and determine when it can
be shared with a third party, according to IDC.
A November 2000 survey of Internet users by PriceWaterhouseCoopers found
that almost two-thirds (60%) of respondents would shop online more frequently if
they were certain that retailers would not use their personal information; 40% said
they would make more online purchases if they knew how the information they
provided at checkout was being used. Respondents also agreed almost
unanimously that retailers should ask customers for their permission before using
or sharing any personal information.
Harris Interactive found that one-half of online users felt that they did not have
an appropriate level of control over how their personal information was collected
and used while 43% felt that companies had no incentive to protect consumer
privacy. Only 39% of respondents in the May 2001 survey felt that companies
collected and handled personal information in a proper and confidential manner.
More than two-thirds (70%), however, believe that the existing laws and company
privacy policies provide an adequate level of privacy, according to Harris.
Women 50%
Men 35%
High School
49%
Graduates
Not Too
Concerned
Somewhat
15%
Concerned
Not Concerned 36%
1%
No Answer
2%
Very
Concerned
46% Source: Gallup, 6/2001
There is little difference between Internet users and those who are not yet
online when it comes to concerns about the misuse of credit card information,
according to a February 2001 survey by the Pew Internet & American Life Project.
The organization found that 68% of Internet users were concerned about the
issue compared to 70% of non-users; overall, 69% of adults in the U.S.
expressed at least some concern. Women were more likely than men to be “very
concerned” about the misuse of credit card information -- as well as Internet
crime in general (see 5.07).
Women 72%
Men 65%
Not Too
Comfortable
30%
Somewhat
Comfortable
28%
Not Very
Comfortable Comfortable
37% 5%
80% 76%
60%
49% 47%
39% 38%
40%
20% 16%
0%
African-Americans Hispanic-Americans All Internet Users
Source: Cultural Access Group, 8/2001
Section VI.
E-commerce and
the Holidays
Pct. Period
2001 2000 Change Covered Source
$17.50 bn $12.00 bn 46% Q-4 IDC (1)
$12.40 bn -- -- Q-4 ACNielsen (1)(2)
$11.90 bn $10.80 bn 11% Nov. - Dec. Jupiter Media Metrix (1)
$11.86 bn $9.13 bn 30% Q-4 GartnerG2 (3)
$11.55 bn $9.24 bn 25% Q-4 BizRate.com
5 wks before
$11.00 bn $10.00 bn 10% Christmas Forrester Research (1)
$9.90 bn $6.90 bn 43% Nov. - Dec. Nielsen/NetRatings
$9.50 bn $8.90 bn 7% Q-4 Yankee Group
$6.3 bn $4.80 bn 31% 11/19 - 12/26 BizRate.com
(1) Includes travel expenditures. (2) Holiday-related spending only; total Q-4 2001 spending forecast
is $17.5 bn. (3) Includes Canada.
Pct. Period
2001 2000 Change Covered Source
Boston Consulting
109 mn -- -- Nov. - Dec. Group (1)
106 mn 85 mn 27% Nov. - Dec. Nielsen/NetRatings (1)
69 mn -- -- Q-4 ACNielsen (2)
59 mn -- -- Q-4 IDC
52 mn -- -- Nov. - Dec. Advertising.com (3)
5 wks before
49 mn 43 mn 14% Christmas Forrester Research (4)
46 mn 36 mn 28% Nov. - Dec. Jupiter Media Metrix
(1) Online shoppers but not necessarily buyers. (2) Based on estimate of 60% of Internet users. (3)
Based on estimate of 25% of consumers. (4) Based on 16.6 mn households for 2001.
Pct. of
Online Activity Internet Users
Send e-mails to relatives and friends to discuss
holidays and make plans 53%
Send e-greeting cards to friends and family 32%
Look for gift ideas 45%
Compare prices of gifts 32%
Get information on crafts, recipes, and ideas for
celebrations 24%
Purchase gifts online 24%
Source: Pew Internet & American Life Project, 2000
Traditional
76.5%
Department Stores
Discount
71.3%
Department Store
2000 2001
79%
Stores
80%
15%
Online
13%
6%
Catalogs
7%
6.06 How Long Holiday 2000 Online Buyers Have Shopped Online
Percent of online buyers
First Holiday
Shopped Online
12%
Started
Shopping
Online Since
Shopped Online Last Holiday
More Than One 15%
Year
65% Shopped Online
Last Holiday
8%
A majority of online buyers during the Holiday 2001 shopping season will be
women, by a margin of 53% to 47%, according to Jupiter Media Metrix. This
skew towards women is down slightly from 2000, but is still a significant shift from
Holiday 1999 when men accounted for 61% of online buyers.
Although women are expected to account for a majority of online buyers
during Holiday 2001, men are more likely to buy at least some of their gifts online.
NextCard expects two-thirds of male Internet users to make one or more
purchases online during Holiday 2001 compared with 56% of female Internet
users.
Men Women
39%
1999 (2)
61%
55%
2000 (2)
45%
53%
2001 (1)
47%
The majority (51%) of Holiday 2001 online buyers will spend 25% or less of
their gift budgets at online storefronts, according to Jupiter Media Metrix, which is
roughly comparable to the spending pattern in 2000. Boston Consulting Group
estimates that online buyers will spend an average 27% of their Holiday budgets
online in 2001, which is up from 22% for 2000. Among veteran Internet users,
IDC predicts that buyers will spend approximately 27% of their Holiday 2001
budgets online while those who are new to the Internet will allocate about 23% to
online purchases.
51% To 75%
13%
26% To 50%
31%
Source: Jupiter Media Metrix, 11/2001
51% To 74%
10%
10% To 30%
31% To 50% 30%
19%
Source: BIGresearch, 3/2001
Almost three-in-four (74%) online buyers will spend at least $100 during
Holiday 2001, according to Advertising.com, and one-in-four (25%) will spend
more than $300. Harris Interactive predicts that the average online buyer this
year will spend $276 on Holiday purchases, up from $179 for the previous year.
IDC predicts that online spending per buyer for the fourth-quarter of 2001 will be
$297.
6.10 Holiday 2001 Online Spending Plans Among U.S. Internet Users
Percent of online buyers
> $300
25%
< $100
26%
$100 To $300
49% Source: Advertising.com, 2001
GartnerG2 86%
Advertising.com 75%
Vividence 56%
Accenture 56%
Prior To 11/1
33%
After 11/30
14%
Between 11/1
Between 11/15
And 11/14
And 11/30
31%
22%
Q4-2000 72%
Q4-1999 69%
Q4-1998 65%
Almost three-in-four (72%) Internet users shopped for at least some of their
gifts online for Holiday 2000, Greenfield Online while America Online estimates
that 75% of its own members bought something online during the same period.
The likelihood that an individual will do at least part of his or her Holiday
shopping online is, not surprisingly, highly correlated with household income.
Greenfield estimates that 81% of households with incomes of $50,000 or more
made one or more online purchases for Holiday 2000 compared to 64% of
households earning less than $50,000.
1999 2000
74%
Buyers
67%
80%
Shoppers
69%
2000 $114
1999 $99
Apparel $2,445
Books/Music/Videos $1,696
Auctions $1,364
Toys $1,053
As is the case during the rest of the year, the most popular product categories
among Holiday shoppers are books, music/videos/DVDs, and apparel. Product
categories which jump the most in popularity among online buyers during the Q-
4/Holiday shopping period include toys and games, gift certificates, food and
wine, and home décor items.
6.17 What U.S. Consumers Plan To Buy Online For Holiday 2001
Percent of online buyers
Jupiter Media
Product Category Metrix Advertising.com NextCard
Books 40% -- 48%
CDs/Videos 28% / 20% 36% / -- 41%
Toys/Games 29% 34% 41%
Apparel & Accessories 30% 32% 36%
Gift Certificates 18% -- 24%
Home/Garden Items (1) 9% 23% 24%
Consumer Electronics 13% 39% 17%
Computers/Software 18% -- 17%
Food/Wine 11% / 4% -- 9%
Beauty/Health Items -- -- 8%
Jewelry 13% 9% --
(1) Jupiter Media Metrix and Advertising.com estimates are for housewares only.
6.19 What U.S. Consumers Plan To Buy Online For Holiday 2001
Percent of online buyers
Books 40%
Toys 29%
Music 28%
Videos 20%
Gift Certificates 18%
Fragrance/Cosmetics 14%
Flowers 13%
Jewelry/Watches 13%
Food 11%
Sporting Goods 9%
Pet Supplies 9%
Kitchen 7%
PDAs 2%
Almost two-thirds (65%) of online shoppers looking for Holiday gift ideas used
search engines for assistance, according to Accenture, and a majority (55%)
already had some gift ideas in mind before visiting retailer websites. The
company also reports that the gift ideas of almost one-in-four (22%) Holiday 2000
online shoppers were influenced by banner ads and by word of mouth.
Use Search
Engines To Find 65%
Retail Sites
Randomly Surf
38%
Internet
News Reports 6%
6.22 Why U.S. Internet Users Plan To Shop Online For Holiday 2001
Percent of online buyers
Ability To Shop
47%
When I Want
Saves Money 8%
6.23 Why U.S. Internet Users Shopped Online For Holiday 2000
Percent of online buyers
Source: As noted
Harris Interactive and the Boston Consulting Group report that while Holiday
shoppers may visit a variety of online storefronts, they actually buy from only a
small number of sites. From Holiday 1999 to 2000, the companies estimate that
the number of sites patronized by online buyers declined from an average of
slightly more than two to 1.7.
More than one-in-four (28%) online buyers purchased something from
Amazon.com during Holiday 2000, according to Gartner Group, which is more
than twice as many as the closest competitor, eBay at 13%. An October 2001
survey of online buyers by NextCard found that almost one-half (46%) planned to
spend a portion of their Holiday 2001 budget at Amazon.com, followed by eBay
(24%) and BarnesandNoble.com (21%). The remaining top 5 sites among
Holiday shoppers include WalMart.com, JCPenney.com, and Target.com.
2000 1999
2.4
Apparel Buyers
1.7
1.9
Electronics Buyers
1.7
2.2
Toy Buyers
1.7
Amazon.com 28%
eBay.com 13%
eToys.com 8%
BarnesandNoble.com 5%
Buy.com 4%
JCPenney.com 4%
EddieBauer.com 4%
ToysRus.com 3%
WalMart.com 3%
LLBean.com 2%
Spiegel.com 2%
Gap.com 2%
VictoriasSecret.com 1%
ZanyBrainy.com 1%
Boston Consulting Group reports that 82% of online buyers were generally
satisfied with the experience during Holiday 2000 compared with 76% the
previous year. The number of buyers who were dissatisfied declined by 40%
between 1999 and 2000, from 5% to 3%. A similar survey conducted by NPD
Group found that 57% of online shoppers in 2000 were “very or extremely
satisfied,” 35% were “somewhat satisfied” and only 8% were “not too/not at all
satisfied.”
Buyers were generally more satisfied than shoppers with the online
experience, according to PriceWaterhouseCoopers. Almost four-in-five (79%)
buyers were completely satisfied compared to 55% of shoppers. The most
common complaints among online Holiday shoppers/buyers included items that
were out of stock, unable to find a particular item, and websites that were too
slow or temporarily unavailable (see 6.28).
Shoppers Buyers
Dissatisfied With 0%
All Sites 3%
2000 1999
27%
Very Satisfied
38%
49%
Satisfied
44%
19%
Neutral
15%
3%
Dissatisfied
2%
2%
Very Dissatisfied
1%
44%
No Difficulties
37%
22%
Item Out Of Stock
31%
7%
Could Not Find Item
21%
N/A
Item Received Late
14%
Order Received 8%
Incomplete N/A
6.29 Barriers To U.S. Internet Users Shopping Online For Holiday 2000
Percent of online buyers
Q4-2000 5.01%
Q4-1999 8.82%
Q4-1998 5.26%
Q4-1997 3.97%
Q4-1996 5.74%
0% 2% 4% 6% 8% 10%
U.S. Census Bureau, Economics & Statistics Administration, 2001
Q4-2000 27.9%
Q4-1999 28.7%
Q4-1998 28.4%
Q4-1997 28.3%
Q4-1996 28.4%
20%
16%
10.81%
8.82%
12%
8.47%
8.51%
8.35%
8.29%
8.17%
8.13%
8.14%
7.94%
7.32%
7.05%
8%
4%
0%
February
January
May
July
August
September
November
October
December
April
March
June
U.S. Census Bureau, Economics & Statistics Administration, 2001
1996 3.1%
1997 4.5%
1998 5.1%
1999 5.4%
2000 2.4%
0% 1% 2% 3% 4% 5% 6%
20%
13.24%
12.77%
16%
9.14%
12%
8.75%
8.74%
8.32%
8.34%
6.99%
6.83%
6.24%
5.77%
4.88%
8%
4%
0%
December
September
October
November
March
June
April
August
January
February
May
July
Source: Forrester Research, 2001
2001 2000
$268.33
October
$264.86
$285.34
November
$292.28
$308.44
December
N/A
-----------------Amount Spent-----------------
Age Group Girls Boys
8 to 9 years old $ 16.08 $ 14.92
10 to 12 years old $ 33.70 $ 26.64
13 to 15 years old $ 47.75 $ 34.44
16 to 17 years old $ 97.20 $ 67.29
18 to 21 years old $156.03 $103.53
Source: Harris Interactive, 1/2001
Girls Boys
3%
8 To 9 Years Old
2%
3%
10 To 12 Years Old
6%
2%
13 To 15 Years Old
2%
6%
16 To 17 Years Old
3%
18%
18 To 21 Years Old
7%
6.38 Average Q-4 Online Spending Per U.S. Household Per Month By
Category (2000/2001)
In dollars per household buying online
2000 2001
Category Oct. Nov. Dec. Oct. Nov.
Small Ticket Items:
Software $42.02 $53.48 $44.27 $43.34 $48.35
Books $33.83 $39.97 $36.51 $38.58 $36.52
Music $30.29 $33.68 $32.13 $33.42 $32.97
Videos $35.97 $30.86 $38.51 $31.09 $34.22
Office Supplies $53.01 $83.28 $61.86 $57.30 $57.34
Apparel $64.76 $76.60 $85.66 $69.69 $76.07
Footwear $60.79 $63.78 $64.31 $65.92 $58.62
Jewelry $63.57 $45.78 $76.79 $82.04 $73.90
Flowers $47.82 $43.24 $57.57 $59.20 $46.83
Linens/Home Décor $70.04 $61.94 $70.63 $62.98 $58.68
Health & Beauty $37.04 $37.98 $40.15 $39.94 $39.45
Small Appliances $60.05 $87.42 $77.64 $73.22 $62.58
Toys/Video Games $51.96 $73.95 $75.69 $49.97 $66.98
Sporting Goods $73.43 $81.98 $88.44 $72.28 $67.08
Tools & Hardware $61.58 $63.62 $68.65 $77.29 $64.70
Garden Supplies $50.83 $30.03 $41.20 $58.26 $31.73
Toys and video games accounted for the largest share (8.7%) of online retail
spending among small ticket items during the fourth-quarter of 2000, followed by
apparel (7.5%) , books (5.2%), and music (3.7%). The top five categories
combined accounted for approximately one-quarter (28.4%) of total small ticket
online retail sales during the period. Small ticket items collectively accounted for
48% of total online retail sales while big ticket items (see 6.41) accounted for
52%.
Apparel 7.54%
Books 5.15%
Music 3.64%
Software 3.35%
Videos 2.56%
Jewelry 1.90%
Footwear 1.50%
Flowers 1.40%
0% 2% 4% 6% 8% 10%
More than one-half of all online sales for the entire 2000 calendar year were
generated during the fourth-quarter in the toys/video games and linens/home
décor product categories. Other products whose online sales appear highly
dependent upon fourth-quarter activity are apparel, small appliances, and
sporting goods.
Apparel 44.94%
Footwear 37.44%
Videos 35.50%
Books 35.11%
Music 34.37%
Jewelry 33.90%
Flowers 33.20%
Software 30.73%
Furniture 1.11%
Appliances 0.63%
Other 7.07%
Furniture 34.54%
Appliances 34.37%
Other 29.04%
Online shopping activity during Holiday 2000 peaked in week 7, between 12/3
and 12/10/2000, according to Nielsen/NetRatings’ Holiday E-commerce Index.
The Holiday E-commerce Index is comprised of five representative e-commerce
sites in each of eight categories and is designed to act as a barometer which
gauges the weekly level of online holiday shopping traffic.
100
80
68.4
62.2 63.4
60 53.6
49.5
42.3
37.9
40
20
0
10/25 To 11/5 To 11/12 To 11/19 To 11/26 To 12/3 To 12/10 To
11/5 11/12 11/19 11/26 12/3 12/10 12/17
Source: Nielsen/NetRatings, 2000
Click-and-Mortar
2.97
Retailers
Internet-Only
1.86
Retailers
6.47 Fulfillment Time For Select Online Retailers For Holiday 2000
Average time to ship
fulfillment performance was the primary shipping method offered by each retailer,
with most employing UPS Ground or Priority Mail from the U.S. Post Office. The
stand-out retailer in fulfillment performance, Outpost.com, was able to deliver its
customers’ orders on average in less than two days due in large part to its
offering Airborne Overnight Air delivery as its standard shipping method. Among
all of the retailers tracked by Bizmetric.com, the average elapsed time between
placing an order and the customer receiving his or her order was 4 days, 15
hours, 8 minutes.
Borders.com 6.81
Amazon.com 6.63
eToys 5.75
BarnesandNoble.com 5.35
BestBuy 5
Walmart.com 4.78
Egghead.com 4.76
SmarterKids.com 4.53
BabyCenter 4.47
REI-Outlet 4.46
Bluelight 4.34
Gap 4.15
Tower Records 3.87
800.com 3.75
REI-Outlet 3.57
KBkids 3.56
CDnow 3.1
Target 2.61
Lands' End 2.47
Outpost.com 1.77
0 2 4 6 8
Total Time to Delivery in Days
BizMetric found that most of the online retailers it tracked were able to keep
their promises of delivery by Christmas if orders were placed by the published
deadlines. Out of 84 last minute orders placed, 92% were delivered on time and
10 of the 16 companies were able to deliver by Christmas 100% of the 47 orders
they received.
Last
Minute Late Pct. of Late On-Time
Online Retailer Orders Orders Deliveries Delivery
Amazon.com 10 0 0% 100%
CDnow 7 0 0% 100%
eToys 6 0 0% 100%
GAP 2 0 0% 100%
KBKids 5 0 0% 100%
REI-Outlet 4 0 0% 100%
SmarterKids.com 5 0 0% 100%
Tower Records 2 0 0% 100%
Wal-Mart 4 0 0% 100%
Lands’ End 2 0 0% 100%
BarnesandNoble.com 12 1 8% 92%
800.com 9 1 11% 89%
Outpost.com 6 1 17% 83%
Target 4 1 25% 75%
Bluelight 2 1 50% 50%
Borders 4 2 50% 50%
Average 84 7 8% 92%
Source: Bizmetric.com, 2/2001
Appendix
Data Sources
The charts, tables, and other data provided in this report are all sourced from
published, publicly-available information produced by the following organizations: