Chuzzlewit
Below find a article describing some of the statistics of e-commerce this past holiday season. Note the reference to both the $$$ and number of AOL online members that took the plung and purchaced online. What is pertinent is that AOL can capture these transactions that were entered with a advertiser on their site. It's my understanding that in 1-3 years the revenue model between online retailer and portal (AOL in this case) will be one of commission, wereby AOL will be getting a piece of the transaction.
This is significant as in the catalogue business printing and mailing costs (fingerhut as example) run 25%. In the online model lets say AOL could get 5%, that works out to 60 mil based on transactions (1.2bil) during the past 6 week Christmas season. This is a win win deal between the retailer and portal in that its cheaper (elim catalogue, postage etc bring cost down 20%), its faster with immediate order confirmation and fulfillment and more reliable (data entry and out of stock issues dealt with immediatly.
Here's something from American Banker (2/11/99)
>The current state of affairs is reflected in Forrester Research Inc.'s estimate that on-line shoppers stop short of paying for what they accumulate in Internet "shopping carts" 66% of the time.
Consumers are frustrated and merchants are not closing all potential sales in a market that Forrester projects will grow from $51 billion in 1998 to $1.4 trillion in 2003.<
Thats a 27 fold increase in online purchaces. If sales rungup through AOL increased 27 fold and they got 5%, that would come to 1.62 billion.
This is where the action will be in the next 1-3 years.
Copyright 1999 UMI, Inc.; ABI/INFORM
Copyright ASM Communications Inc 1999
Adweek (Eastern Ed.)
January 18, 1999
SECTION: Vol. 40, No. 3 Pg. A8-A9; ISSN: 0199-2864;
LENGTH: 1181 words
HEADLINE: Net worth
BYLINE: O Leary, Noreen
BODY:
Headnote:
An influx of new, online Christmas shoppers gave Web retailers a significant capital infusion.
Finally there's some substance to back up the hype about online retailing. Fourth-quarter holiday sales offered the first real glimpse of how the Internet is beginning to serve a retail mass market. No longer is the Web the sole province of techies and early adopters. Its audience is continually expanding, and as a result, so are the coffers of many e-retailers.
According to a new survey from Zona Research, online spending grew nearly 200 percent, led by first-time buyers and consumers in the over-50 age group. Those middle-aged shoppers increased their spending on average by 545 percent, as they ponied up over $ 626 compared to $ 97 in the year-ago quarter. By contrast, their presumably more Internet savvy kids, those under 25 years old, upped their spending by only 36 percent to $ 210, from $ 154 last year. While Zona reports that about 75 percent of its respondents bought books, music and videotapes in the fourth quarter, nearly half also purchased computer-related products. The Redwood City, Calif.-based firm also singles out newer consumer trends: Almost one third of purchases were for apparel; a fifth for consumer electronics and "significant percentages" toward food and beverages, travel and tourism, personal care products and flowers.
"This is the first year we saw a good cross-section of Internet users shopping," says Clay Ryder, Zona vice president, chief analyst. "1997 was the beta test. 1998 was the first year where online commerce was real.... After 1998, retailers will have to rethink the Internet's role in their strategies."
Rethink, indeed. Already the Gap's 1-year-old site generates more volume than any of its traditional stores, save one. Analysts estimate that fourth-quarter online sales for the Net overall are expected to ring up $ 3.5 billion-less than 1 percent of all retail sales-but almost triple the amount spent during the fourth quarter of 1997. At America Online alone, members spent an estimated $ 1.2 billion with associated retailers during the six-week holiday season. AOL, which has historically skewed toward male computer users, now says 50 percent of its 15 million members are female.
"We can legitimately say that 1998 is the year the Internet came of age," contends James McQuivey, a senior analyst at Forrester Research, Cambridge, Mass. "We actually witnessed a market where women were comfortable shopping online. There was finally stuff available they wanted and they also had names they trusted. "Macy's coming online helped and sites like Amazon and eToys made online shopping less prohibitive," he continues. "E-commerce has become less geeky. It now interests the average shopper and that average shopper happens to be female."
In the fourth quarter, women made up about 47 percent of the Internet's population, up from 40 percent a year ago.
Consider AOL's Shopping Channel, where the toys, kids and babies category was the most popular site during the holidays, followed closely by apparel. The Net's ability to unearth hardto-find phenomena like the Furby helped draw those new shoppers online. Likewise, at iQVC, the site for QVC's TV-shopping network, holiday sales are estimated to have more than tripled over the previous year, bringing in more than $ 500,000a-day during the Thanksgiving/Christmas period. IQVC says 70 percent of those customers were women, buying everything from toys and electronics to kitchen appliances and jewelry.
In its survey, Zona found that holiday spending by online consumers rose to an average $ 629, up from $ 216 last year, with 58 percent of those buyers having spent nothing on the Net in 1997. For its part, AOL said more than 1.25 million of its members took their first dip into e-commerce. "The '98 holiday season was a turning point because of the sheer numbers," observes Wendy Brown, AOL's vice president, electronic commerce. "The most striking behavior was the number of people who decided to shop online for the first time."
The exponential value of that is clear. Getting first-time e-consumers over the hurdle of handing out credit-card numbers has proven a key factor in changing their future patterns of retail behavior. Having gotten over security issues, they may spend more after the holiday shopping blitz. AOL says 98 percent of its shoppers say they are now motivated to buy online in the next six months, with 73 percent saying they are "very likely" and 25 percent "likely" (Similarly 61 percent of Zona's respondents say they expect to spend more money online this year.)
The growing dominance of Internet commerce by three companies-AOL, Yahoo! and Microsoft-has also helped to fuel everyday acceptance of online shopping. As more site visitors are attracted to those online mall resources, more retailers have been signing up. These sites offer additional conveniences: In some instances, consumers need only to register their credit card information and personal data once for multiple purchases. In addition, the government's recent three-year extension of a no-tax policy on the Internet means the prices for many electronic purchases will remain attractive compared to purchases in states where there are sales taxes.
But Internet discounts over retail are no longer the main draw for consumers. Zona found that 36 percent of those surveyed turned to the Web to save time, compared to 15 percent to save money and 11 percent to avoid crowds and clerks. Ten percent said they found better selection on the Web while 10 percent said online shopping was fun.
The fourth quarter's booming sales brought its share of fulfillment delays, product shortfalls and order and shipping snafus. For many Internet shoppers those hassles are overshadowed by the medium's new service options. AOL's success with its newly-introduced 800-number Holiday Shopping Helper underscored one such added resource. The helpline acted as a site concierge, answering questions ranging from the most basic 'How do I shop on the Internet?' queries to requests for gift ideas. Other new services offer e-mail gift certificates and shopping agents which search for the best price. Lands' End allows shoppers to type in their hair color, weight and size. The site then creates a computerized model to allow shoppers to 'try on' clothes. At iQVC's jewelry site, the gift registry service allows users to register details like ring size, preferred stones and favorite designers for their gift givers to access.
The ongoing growth of Net bookselling pioneer Amazon.com, whose fourth-quarter sales surged four times over the year-earlier period, to $ 250 million, suggests as much about the Web's future as it does the Web's retail trailblazing to date. "The continued success of Amazon and CDnow is a positive harbinger for other online retailers," says Ken Cassar, an analyst with New York-based Jupiter Communications. "A lot of people start by buying commodity price-reduced items there and end up sliding up the food chain."
LANGUAGE: ENGLISH
JOURNAL-CODE: AWE
AVAILABILITY: Full text online. Photocopy available from ABI/INFORM
ABI-ACC-NO: 01762240
LOAD-DATE: February 8, 1999 |
