Study: E-tail Gaining on Retail

Further indicating that e-commerce is continuing to transform the traditional retail landscape, a new study released Tuesday by business services firm Ernst & Young shows that American consumers will make nearly a third of their total holiday purchases over the Internet in the coming weeks.

The company also found that the number of consumers doing at least half of their buying online will rise from 9 percent in 1999 to 20 percent this year. Conversely, only 13 percent of consumers have no plans to conduct online transactions, a drop from last year's figure of 40 percent.

"This is a very interesting online holiday season -- strong at the upper and lower ends of the price spectrum and very promotional for most retailers in between," said Ernst & Young global director of retail and consumer products Stephanie Shern.

Shern also noted that total online retail sales in the U.S. for the entire year will probably hit the US$38 billion mark, not including travel and automobile sales made on the Web, while volume for the holiday season will be around $11 billion.

Brick-and-Clicks Ahead

The Ernst & Young study is the latest in a string of holiday shopping reports that point to the growing influence of bricks-and-clicks in the highly competitive e-tail arena.

It found that the emerging trend of the year is the recent shift away from the pure-plays and toward retailers that sell in multiple channels -- online, by mail order and on the Web.

"We see the e-winners as those companies who are implementing a multi-channel strategy so consumers see a consistent and integrated brand at the corner store or the online mall," said Shern.

Although those surveyed ranked Amazon.com as the most popular e-tailer, Ernst & Young predicts that known brand leaders such as JCPenney.com, WalMart.com and BestBuy.com will claim a larger share of the online purchase pie leading into 2001.

Favorite Buys

This holiday season, online consumers will also shop in broader categories than before, Ernst & Young said.

While books, computers and music remain the perennial purchasing favorites among e-shoppers, apparel, health and beauty products are posting a strong showing this year, despite the sectors' problems in gaining a foothold in the online market.

Fashion buys are even more popular than toys this year. More than a third of those surveyed said they plan on buying clothing online, compared to 28 percent who will be making toy purchases.

Time Demands

Despite the widely-publicized infrastructure and fulfillment problems that plagued e-tail fledglings and heavyweights alike last holiday season, consumer dissatisfaction in the e-commerce market has not waned, said Ernst & Young.

The primary driver of e-commerce's popularity is the time-saving factor, with 62 percent of respondents citing that as a primary advantages of buying via the Web.

In addition, the hustle and bustle of brick-and-mortar retailers during the holidays is too trying for many consumers. More than half of the survey respondents said they did not like dealing with the rush of crowds in stores. Other reasons for purchasing online included more convenient shopping hours and less driving.

Glitch-Free Convenience

However, researchers advised e-tailers that the best recipe for success is to meet consumer demands and sidestep glitches.

"To win in online retailing, companies must excel in meeting or exceeding customer expectations and improving the customer relationship through world-class operations and merchandising," said Shern.

As part of its fourth annual Global Internet Retailing report, researchers surveyed roughly 1,400 U.S. consumers about their holiday e-tail habits and history.