Online Holiday Sales Seen Topping $1 Billion: Money on the Net
Black Forest, Colorado, Nov. 20 (Bloomberg) -- Pete Holzmann
is giving online merchants their best holiday gift yet: He's
doing his shopping on the Internet.
''The Web is open 24 hours a day, is always polite and lets
me shop at my own pace,'' said the Black Forest, Colorado,
consultant, who lives 15 minutes from a major mall yet is buying
gardening supplies, computer equipment and books online.
Holzmann will contribute to the first holiday season when
online sales top $1 billion, as popular retailers such as Gap
Inc. and Wal-Mart Stores Inc. start offering a vast array of
products and credit-card buying becomes safer.
''We're seeing the first big surge toward online retail
shopping and it's happening this quarter,'' said Gartner Group
analyst Bruce Guptill.
Online shoppers will shell out $1.1 billion in November and
December, compared with $300 million last year, according to
market researcher Jupiter Communications. About a quarter of that
will be for gift-related purchases, said Nicole Vanderbilt,
Jupiter's director of digital commerce.
''Enough people have tried it, realized it's low risk and
had successful experiences,'' said Kate Delhagen, an analyst at
Forrester Research. ''They're shopping across more categories
than a year ago.'' Holzmann, for instance, didn't shop online
last Christmas because there was little he wanted to buy.
This year, in addition to the electronic goods, compact
discs and books that make up the bulk of online sales, shoppers
can buy everything from toys to fashion accessories to
dinnerware.
More Surfers, More Shoppers
An increase in Internet literacy is adding to the online
shopping spree.
Some 25.7 million people in the U.S. use the Internet, a 49
percent increase from last year, according to Zona Research. This
year, 40.9 percent of U.S. households have a personal computer,
up from 35.2 percent a year ago, Dataquest Inc. said.
Further, brand-name retailers like J.Crew Group Inc., Eddie
Bauer Inc., Macy's, Gap, Barnes & Noble Inc. and Spiegel Catalog
Inc. have either set up shop or made shopping on their Web sites
easier.
''This year we have an all-star lineup of brand names that
people know and love in the real world,'' said Wendy Brown, vice
president of electronic commerce at online service America Online
Inc., which features J. Crew, Gap, and Harry and David. ''It
lends a level of credibility that may not have existed before.''
To ease security fears, some merchants are offering online
buyers greater protections than traditional shoppers get.
Internet directory Excite Inc., for example, guarantees that
it will pay the difference not covered by a consumer's credit
card in case of fraud involving products sold through its online
shopping guide. AOL offers similar protection.
Even the Better Business Bureau is giving a cyberspace stamp
of approval to vendors like J.C. Penney Co., Lands' End Inc. and
Shop at Home, the online version of the Home Shopping Network.
To qualify, the company must have a satisfactory complaint-
handling record, among other requirements.
''We're getting on average three times more orders than we
were last year,'' said Allison Scherer, manager of media
relations at Spiegel, which offers about 95 percent of its
catalog on the Web and features secure ordering and a customer-
satisfaction guarantee.
Click Till You Drop
Online vendors also are getting wiser to the fact that
shopping burnout doesn't happen solely to people tramping through
the mall.
Yahoo! Inc., another Internet directory service, next week
will unveil a shopping guide powered by technology from startup
Junglee Corp. The guide will let shoppers search thousands of
online databases for prices of popular items, compiling them in a
list for comparison. The service then directs the shopper to the
Web site with the best price.
Visa International Inc. will issue a credit card with a
Yahoo logo, which Yahoo will encourage its customers to use.
Computer users can log onto Web sites like compare.net and
give specifications of an item, such as a computer with CD-Rom.
The site will return the latest prices from different makers.
''The experience of shopping is much improved from a year
ago,'' said Ted Julian, an analyst at International Data Corp.
And should all this shopping seem too mercenary, an Internet
service called eyegive allows shoppers to donate money to their
favorite causes, simply by browsing through Web sites with ads
related to their hobbies and interests. A portion of those
advertisers' fee goes to the user's designated charity.
The service, which began on Nov. 4, boasts 2,000 members and
is increasing at 50 percent a week.
''Ours is an endeavor that could not exist outside the
Internet,'' said eyegive founder Robert Grosshandler.
To be sure, the novelty of Internet shopping -- being able
to buy brie from France or a gift basket from Cincinnati -- may
be just that, a fad unlikely to make a ripple in an economy where
U.S. consumers will spend about $4 trillion this year.
And merchants still need to win over shoppers like 28-year-
old Heidi Herman, a Seattle resident who says she loves to browse
online but is reluctant to buy much except for the occasional
knickknack.
''I would never look for something like clothes,'' she
said.
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