New Data Confirms $10B+ E-Holiday

A report released Wednesday by Jupiter Research has further confirmed that U.S. consumers spent more than US$10 billion online during the recently concluded holiday shopping season.

Jupiter said that U.S. consumers spent $10.8 billion online during November and December, a 54 percent spike from last year's levels and a 126 percent leap from the 1998 season.

Earlier this month, Goldman Sachs and PC Data Online reported that online sales for the final 10 weeks of 2000 reached $10.7 billion, while the NPD Group said Tuesday that online sales for November and December totaled $12.2 billion. For its part, eMarketer reported that online sales for the final three months of 2000 generated $12.5 billion.

Jupiter found that roughly 36 million consumers, accounting for about 13 percent of the U.S. population, purchased goods online during the holiday shopping season, spending $304 on average. As part of its survey, Jupiter interviewed more than 2,000 online consumers about their purchasing patterns.

"Online retailers who invested in improving back-end operations this year were winners in satisfying holiday online shoppers," said Jupiter analyst Heather Dougherty. "However, moving forward, the challenge is for retailers to retain and expand customer relationships, and continue to increase online sales to justify the operations investments well into 2001."

Pure-Plays Fare Well

Despite the highly-publicized failures of many dot-coms in recent months, these closures apparently did little to tarnish the image of e-commerce as a whole among consumers.

According to Jupiter, online users split their purchasing almost evenly, with 35 percent of those surveyed buying from pure-play e-tailers and 37 percent buying from merchants that also have a physical store or catalog.

These figures dovetail with a report released earlier this week by Nielsen//NetRatings and Harris Interactive, which found that Internet-only retailers scored higher among consumers in terms of customer satisfaction than their brick-and-click counterparts, accounting for 7 of the top 10 sites in customer satisfaction.

The study by NetRatings and Harris attributed this strong showing to the fact that pure-plays have a more established online customer base, one that is fully acclimated to purchasing via the Web.

Satisfied Customers

The Jupiter study also backed up earlier reports showing that customers are largely happy with their experiences buying online. According to Jupiter, in a figure virtually unchanged from the previous year, 90 percent of e-shoppers reported being "very satisfied or satisfied" with buying merchandise during the 2000 holiday season.

Similarly, the Goldman Sachs/PC Data Online report released last week found that more than 80 percent of Net consumers were likely or extremely likely to shop again online, while 58 percent said they found a better overall shopping experience online this year compared to last year.

A separate report from NPD pegged the number of satisfied customers at above 90 percent.

Divide Narrowing

One of the more notable trends of the 2000 holiday season, according to Jupiter, was the "emergence of the mass-market consumer."

While online purchases by higher-income, affluent buyers have dominated the e-tail sector in the past, the study found that purchases by lower and middle income online users are on the upswing.

The next challenge for e-tailers will be to convert online holiday gift-buyers into consistent, off-season Internet purchasers, thereby increasing their revenue from Internet transactions in the process, said the study.

Demographic Dance

In order to do so, Jupiter advises merchants to adapt to the demographic shift among online buyers, who are becoming more diverse in age, gender and income.

According to the study, this gradual changeover has "important implications for the sales strategies of online retailers, particularly in terms of site navigation, product presentation and customer service."

Additionally, it warned that online retailers must be able to support newly upgraded operations by continuing to increase sales by maximizing customer value, encouraging user loyalty to drive future revenue and maintaining communication with consumers beyond the holidays.