Consumers Flock Online (No EGGS references, but good reading)
E-Retailers Rack Up
Record Holiday
Season
Although online retailers aren't
raking in profits, the Internet
has become a shoppers'
paradise. (ABCNEWS.com)
By Michael J. Martinez
ABCNEWS.com
Jan. 15 — Nineteen ninety-eight was
the year e-commerce arrived.
Online retail sites had a great holiday
shopping season. Total holiday sales over
the Internet are estimated anywhere from
$2.3 billion to $3.5 billion — at least a 300
percent increase over 1997. America
Online's 15 million members spent $1.2
billion between Thanksgiving and
Christmas, or about $80 per member. AOL
reports that more than 1 million members
made their first online purchase this year.
Online retailers reported similar gains.
Bookseller Amazon.com reported $250
million in fourth-quarter sales, up from just
$66 million in the last three months of 1997.
Amazon.com's failure to turn a profit has
not prevented its stock price from soaring.
In the Net We Trust
One barrier that finally appears to have
fallen is online (in)security. No longer do
consumers fear putting their credit card
numbers online.
“That fear is usually quite pronounced
among new users,” says Andrew Bartells,
Connecticut-based analyst for the Giga
Information Group. “Once you get them to
try it once, generally they're hooked.”
Bartells points to AOL as one of the
leaders in online commerce, saying that the
ease-of-use and friendliness of AOL's
proprietary content draws consumers in, and
makes them feel comfortable opening their
wallets online. Jon Zeitlin, manager of
Excite's shopping strategy, agrees with that
assessment.
“We look at AOL in terms of having
been in this gig for three years, and we truly
admire them,” Zeitlin says. “That doesn't
mean we don't want to beat them at their
own game.”
E-Commerce Trends
The growing penetration of the Internet
portends not only big numbers but shifts in
consumer habits. Not only will online sales
continue to grow in 1999, but online
shopping will become pervasive — even
for purchases made at a brick-and-mortar
store.
Some trends are already emerging:
“Portal” sites are quickly evolving into
destinations in and of themselves,
positioning themselves as online shopping
malls. With America Online leading the
way, megasites like Yahoo! and Excite now
provide “contextual commerce” — a
process where each click by a user leads
inexorably toward a purchasing decision —
along with access to thousands of stores.
Price matters less than ease of use and
convenience. While online retail veterans
like Amazon.com regularly discount their
prices, industry observers agree that
consumers go online for convenience. With
the hectic pace of Netizens' lives, it's just
easier to order online. In the longer term,
however, as more and more Americans go
online and competition heats up, they'll start
comparison-shopping and price will
become more of a factor.
Products once thought unmarketable
online are being sold electronically after
all. Shoppers seem willing to pay a
premium (in shipping prices) to avoid
driving to the mall. Even if you're selling
handcrafted custom suits, chances are
someone out there is willing to plunk down
the bucks and transmit his measurements.
According to Ford Cavallari, commerce
consultant and vice president of
Boston-based Renaissance Worldwide Inc.,
“there's nothing you won't be able to sell
online in a few years.”
(Don't believe him? Check out Buy the
Best, which offers stereos that cost as much
as cars, cars that cost as much as small
aircraft, and small aircraft that cost a
fortune.)
Even businesses that sell only through
physical outlets will probably need a Web
presence. Writes industry analyst (and
ABCNEWS.com Next Files columnist)
Mark Anderson: “Although you may not buy
your car or select your doctor on the Net,
the chances are increasingly high that you
did the research there (and made your
buying decision there) first.”
“This year was a good year,” says
Cavallari. “Next year will be a great year.” |
