New study shows holiday sales way up

American consumers spent a whopping US$10.8 billion online last Christmas season. A Jupiter study shows that online shopping had impact spending on offline channels.

Despite talk of gloom and doom in the economy and the failure of dozens of dot-coms, consumers spent a whopping $10.8 billion online during the 2000 holiday season, up 54 percent from a year earlier, according to Jupiter Research.

An estimated 34 million consumers spent an average of $304 online, said Heather Dougherty, an analyst at Jupiter.

Online buyers balanced their purchasing between Internet-only retailers, which attracted 35 percent of shoppers, and online retailers that also have a physical store or catalog, which garnered 37 percent of buyers, Dougherty said.

Overall satisfaction with online holiday shopping remained unchanged from last year, according to Jupiter's survey of 2,000 consumers. Ninety percent of online holiday buyers said they were very satisfied or satisfied with online holiday shopping, compared with 89 percent last year.

"Overall, the 2000 holiday shopping season was very successful," said Laurie Windham, founder and chief executive of Cognitiative.

Expectations were met among 70 percent of online shoppers, and were exceeded among 23 percent, according to a survey of 2,000 consumers by Cognitiative and Greenfield Online. Close to 50 percent reported spending more online than last year, and 55 percent of consumers predicted their online shopping would increase in 2001, Windham said.

Greatest online purchase growth came from experienced online shoppers, rather than consumers who were new to the Web, as first-time shoppers represented only 12 percent of online buyers and an even smaller percentage among the big spenders.

While online holiday sales still represent a fraction of holiday spending, the study found that online shopping did impact consumer spending at other channels, Windham said. As Net-savvy consumers increased the proportion of online holiday purchases, other channel sales were indeed cannibalized. Channels most significantly impacted were direct-mail catalogs and home shopping television networks, Windham said. In both cases, approximately 50 percent of the online consumers claimed to have purchased less from these offline channels because of their Web purchases, she said.

But retail store purchases were also impacted, with 40 percent of consumers reporting less holiday purchases from these traditional shopping channels.

The most common complaints of consumers shopping online concerned products being out of stock, Windham said. Consumers also experienced problems with sites downloading slowly and being unavailable or crashing - often losing orders in progress, she said. While the volume of these types of problems appear to be diminishing compared to last year, they persist for about one-third of online buying consumers.

According to the latest NPD Group e-Visory report, nine out of every 10 online shoppers said they were satisfied with their overall online holiday shopping experiences.

Amazon.com reigned as the most popular site for online holiday purchasing. Somewhat surprisingly, eBay played a very important role this holiday season, reported by respondents as the second most important site for holiday spending, followed by Barnesandnoble.com, JCPenney.com, and eToys. A variety of products were purchased on the Web, with the book category on top, as usual, followed by apparel, music, toys, movies, videos and DVDs.

This year, the online holiday buyer looked even more like the mainstream U.S. buyer than ever before. A little more than half of this year's online holiday purchasers were female, slightly more than a third were over 45 years of age and half had incomes of less than $60,000 per year.

Despite all of the good news, shipping fees were cited as a major feature that held back online purchasing. Thirty-four percent of all Internet users reported "lower or no shipping fees" as the top feature that, if improved, would make them buy more online as opposed to at traditional stores.

Even among those who did buy online during the holiday season, shipping fees emerged as the feature with which they were least satisfied. Thirty-five percent reported dissatisfaction with shipping costs.

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