Recently, more seniors and females have been shopping online rather than driving to malls, AMR senior vice president Bob Parker said. And once one person in a household starts going online to shop, others living under the same roof are likely to follow suit.
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E-commerce, once the domain of "geek types" or consumers with high
disposable incomes, has hit the mainstream. The
U.S. Census Bureau says
e-commerce spending increased by more than 34 percent year-over-year to US$11.1
billion from the third quarter of 2001 to the same period in 2002. And sales
jumped 24 percent year-over-year, to
$13.7 billion, in the 2002 holiday season.
But according to Census Bureau figures taken last fall, e-commerce revenues
still amount to just 1.3 percent of all retail sales. That figure represents a slow
increase from 0.7 percent in 1999's fourth quarter, but it has not changed
much at all since Q4 2001, and it is unlikely to shift dramatically even
after robust holiday results are taken into account. The upshot remains the
same: E-commerce makes up less than 2 percent of all retail spending.
There is definitely a disconnect here. If e-commerce is becoming an ever-larger
part of consumers' daily lives, why does it account for such a small slice
of the retail pie?
Reams of Research
One fact that does not show up in the Census Bureau figures is that consumers
increasingly are using retailers' Web sites for research, which does not necessarily
translate into measurable online sales -- especially for big-ticket or luxury items.
"There's a significant amount of retail being influenced by the Web, but
there's not a lot of final transactions happening online," Bob Parker,
senior vice president at AMR Research, told the E-Commerce Times.
Some companies, such as Circuit City (NYSE: CC) , Best Buy (NYSE: BBY) and Sears, are trying to convert
researchers into buyers via programs that allow customers to purchase items
online and then pick them up at a brick-and-mortar store.
Certain products, though, must be seen or touched in person before a purchase can
be finalized, according to Gene Alvarez, Meta Group vice president of electronic
business strategies. "Would you buy a $10,000 plasma screen online? No,"
he told the E-Commerce Times. "But would you evaluate brands versus
each other on the Web and get educated on them? Yes." The Web is at
work in such transactions, though its role may be hard to spot via
conventional research tactics.
Social Shift?
In addition, despite e-commerce's 24/7 convenience, consumers may be clinging to
brick-and-mortar shopping because of its social aspect. Some shoppers simply like
going to a mall and interacting with other people, including friends, neighbors and
even store sales clerks.
E-tailers may be making headway, however, according to AMR's
Parker. He said that in recent months, more seniors and females have
been booting up their PCs to shop, rather than driving to malls. And once
one person in a household starts going online to shop, others living under
the same roof are likely to follow suit. In a way, then, online shopping
retains a social aspect -- within the household. However, Parker said,
this kind of activity does not necessarily show up in e-commerce
research, so it is not an obvious trend.
A Broad Problem?
Alvarez noted that if dial-up consumers encounter high-bandwidth
features, they are more likely to be "furious" than fascinated.
"At least when we all call by phone, we all get dial-tone response at about the same time," he said. "But we haven't reached that yet with the Internet, where everybody or a large proportion of the population have equal speeds to access these sites."
Or Not an Issue?
On the other hand, AMR's Parker said he does not think broadband adoption is
affecting e-commerce sales -- because most e-commerce companies know better
than to use technologies that a majority of shoppers cannot handle. If broadband
were more prevalent, he noted, services like video-on-demand and massively
multiplayer gaming might come into their own.
He added that broadband's lackluster reach prevents the introduction of new
Internet-delivered products and features, far more than it prevents e-commerce
from growing its share of all goods and services sold.
Talkin' 'Bout the Basics
Even outside the realm of broadband, stumbling blocks still abound when it comes
to usability. Some sites still have not mastered one of the most basic foundations of
e-commerce: the search engine. Many consumers are baffled by e-commerce sites'
search tools, according to Alvarez. He calls it the "I-can-search-but-I-can't-find-it"
hitch.
"For example, you type in 'printer' at a site, and up come 5000 hits on
printers, printer cartridges, printer labels, toner and so on," he said. Not
too helpful -- and a clear sign that e-commerce companies have their work
cut out for them to increase their share of total retail sales.
Moving Toward Mainstream
Hurdles aside, one thing is certain: As the Internet and e-commerce have evolved from
innovations into fixtures of modern life, consumers have grown more comfortable
with the concept of conducting transactions online. At the same time, Web retailers --
either consciously or unconsciously -- have made their interfaces more consistent over
the years, adding to consumers' comfort levels.
As familiarity with e-shopping continues to rise, so too will e-commerce's share of
overall retail sales. Its influence may already be more extensive than it looks, and the
march into the mainstream has only just begun.
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