E-commerce -- long talked about, but rarely profitable -- finally came into its own during the year as consumers flocked to the Net to go shopping and stores rushed to put up sites to meet soaring demand.
Some of the biggest surges occurred in the last few weeks of the year. According to Media Metrix Inc., traffic to shopping sites rose 80 percent from the week of November 27 to the week of December 4. America Online Inc. reported that in the first two weeks of December, 750,000 people bought products online for the first time. All in all, shoppers are expected to spend $2.3 billion online this holiday season, according to Jupiter Communications.
So, what happened?
Only a year ago, the industry was struggling to assuage consumer fears about the dark side of the Internet -- a place where credit cards were at the mercy of hackers, and bank accounts could be stripped away at the touch of a button.
But consumers fears ebbed as they realized those fears were overblown. It was still easier to put on a black mask and break into a building to steal credit cards numbers than it was to hack into a computer system.
"There have been no reports of any fraud in three years and nobody's said 'I had my credit card stolen because I used it on the Web,' " said Russ Gillam, vice president of electronic commerce at Buena Vista Internet, a division of the Walt Disney Co. "We've been in the business since September 1996 and haven't had a single incident. All the fears have been proven not worthy."
Shoppers could also find reassurance in the number of mainstream retailers who opened up shop online in the last twelve months. From Starbucks to Macy's to the Gap, the Internet began to look more like a mall and less like a computer lab.
And the mainstream shopper online has been able to get some of the same service they get offline -- things like coupons, gift wrapping and shipping. Combine that with the convenience of Internet shopping, and retailers saw a big opportunity.
"I shop online because it is easy and convenient. I've never had any problems," said Donna Bibbo, a purchasing manager at Amersham Pharmacia Biotech in New Jersey. Bibbo has bought everything from flowers to CDs to tickets to and Elton John concert online. "I've also used discount coupons with no problems in my Internet shopping -- all from the comfort of my own home. Shopping in pajamas has never been simpler."
Shoppers also got more familiar with some of the Internet-only brands like E*Trade Group Inc. as the sites began advertising in mainstream publications and on television. Wild stock valuations also made companies like eBay Inc. household names, when they started getting featured every night on the news.