And just to counter that article with something bullish:
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Forrester's Survey of 120,000 Consumers Reveals eCommerce Will Double by End of 1998
March 27, 1998
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CAMBRIDGE, Mass.--(BUSINESS WIRE) via NewsEdge Corporation -- According to a survey of 120,000 North American consumers released today by Forrester Research, Inc. (NASDAQ:FORR), the number of households that shop and invest on-line -- a high-income, technology-optimistic elite -- will double from 5% to 10% by the end of 1998. On-line connections and PC ownership will soon broaden to include low-income households, generating the next wave of eCommerce-ready consumers. The Report draws its data from Forrester's Technographics '98 Field Study of North American consumers, conducted with NPD Group in the fall of 1997.
Using a segmentation scheme it calls Technographics(TM), Forrester segments consumers by primary technology motivation, attitude toward technology, and disposable income. Technographics further segments consumers according to three motivators: family, career, and entertainment. The Report by Forrester's Consumers & Technographics service is the first in a series of in-depth, quantitative studies on how technology can be used to market products to consumers.
"We're seeing a real paradigm shift in that PC ownership today is defined by one's attitude toward using technology and not based on income," said Josh Bernoff, principal analyst in Consumers & Technographics Strategies at Forrester and the author of the report. "Mass marketers must prepare for a much more economically diverse on-line community."
Currently, 43% of households own at least one PC and 25% of North Americans are on-line -- mostly those who score highest on income, technology optimism, and frequent PC use. However, the Report indicates the growing on-line community will be far more heterogeneous than the current eCommerce participants. Only 23% of low-income optimists are currently on-line, but strong interest in applications like Web browsers and chat will push that number to 29% by the end of 1998. However, Forrester finds these consumers, who lack funds and PC experience, aren't yet ready for electronic commerce. New eCommerce participants will come from three groups:
-- Those who say they are ready to buy on-line.
-- Those who track stocks on-line.
-- Net-connected home banking customers.
According to the Report, only 39% of low-income optimists currently own PCs. However, this moderate penetration hides a burgeoning enthusiasm. When asked about their interest in computers, eight out of 10 prospective buyers surveyed by Forrester in these segments rank near the top of the scale. Enthusiasm combined with falling PC prices and strong demand for applications like home budgeting, educational software and the Internet will drive penetration to 49%. Held back economically from PC ownership, African-Americans and Hispanics in this segment are 50% more likely to buy a first PC than their white counterparts.
"As consumers move on-line, mass marketers must develop strategies that intercept this audience as it does," according to Bernoff. " Mainstream consumers will concentrate their early on-line activities on research. Consumer electronics, real estate, and home improvement sites should deploy deep informational sites to meet this need. Banks, grocery stores, and discount retailers need to invest in a simple user interface and scale economies to satisfy less-sophisticated, price-sensitive customers."
The report also finds that as PC ownership moves down-market, vendors must prepare for a new, broader audience. Ads that promote whizzy computing features will leave first-time, low-income buyers cold.
"Low-cost PC makers like Packard-Bell should build on their bargain-minded base with messages about ease-of-use and joining the PC revolution," says Bernoff. "Computer, software, and on-line vendors can tap into Hispanic and African-American PC aspirations with multicultural media buys."
However, the survey found some obstacles to continuing eCommerce growth. The Report found that the 5% of North Americans who buy and trade securities on-line generally share high incomes, optimism toward technology, and relative comfort with on-line security. These eCommerce participants have been on-line for two years and log on to the Web daily. Currently, on-line buyers rate security as only adequate; those yet to buy rate it as poor. The survey shows that even among Internet transactors, only 26% believe Internet security is excellent. Almost half of all prospective purchasers surveyed by Forrester cite credit card fear as obstacles to future purchases.
"Consumer perceptions are absolutely inhibiting the growth of eCommerce, " says Bernoff. "Think about the messages they're getting: Every time anything is submitted in Netscape, a warning about an unsecure network pops up, riling all but the most savvy Internet users. IBM has a TV ad about server security that would frighten anyone. The first marketing campaign to step up to the plate to promote the Internet as a secure environment to do business will be a clear-cut winner."
The Report, "Consumer eCommerce Readiness," is the first in a series from Forrester's Consumers & Technographics Service. Consumers & Technographics provides a unique combination of data, segmentation, and insight that determines what motivates consumers to buy technology and how consumers use new technologies to enable other purchasing decisions. Report subjects in 1998 will include: retailing, financial services, technology platforms, and media.
Forrester Research, Inc., is a leading independent research firm offering products and services that help its clients assess the effect of technology on their businesses. The company provides analysis and insight into a broad range of technology areas such as new media, computing, software, networking, telecommunications, and the Internet, and predicts how technology trends will affect businesses, consumers, and society.
Technographics is a trademark of Forrester Research, Inc.
CONTACT: Forrester Research, Inc. | press@forrester.com | www.forrester.com | Claudine Belsky, 617/520-5811 | or | Andrea Berthiaume, 617/520-5748 (Investors)
[Copyright 1998, Business Wire] |
