Report: E-Shoppers Shrug Off Dot-Com Shakeout

Despite the deaths of dozens of dot-coms and the stock market plunge that left many e-tailers gasping for air, U.S. consumers continue to shop online because they like the convenience and control it offers, according to a report issued Monday by Forrester Research.

"Rumors surrounding the demise of e-commerce have been greatly exaggerated -- in fact, they are dead wrong," said Christopher M. Kelley, analyst at Forrester Research. "While the number of tech-related pink slips increases, consumers continue to flock to the Net without regard for the pain faced by online retailers."

The report, "Why eCommerce Won't Die," also found that online shopping sales figures grew nearly 580 percent, from US$7.8 billion in 1998 to almost $45 billion in 2000.

In spite of the large number of e-tailers that closed shop in the past year, 98 percent of Web shoppers said they would continue to shop online, while 65 percent said would not alter their online spending habits due to the closures, the report said.

Some of the dot-com deaths in 2000 were ToySmart.com, Pets.com, Furniture.com, MotherNature.com, and Amazon-backed Living.com.

Fabric Test

According to Forrester, e-commerce is rapidly becoming a part of the fabric of consumers' lives and that the longer shoppers are online, the more they purchase. Consumers who began purchasing less than a year ago are buying at a rate of nine transactions a year. However, consumers with more than five years on the Web, make 20 online purchases a year.

Online consumers are also a fairly satisfied lot, according to Forrester. Ninety percent of the Web buyers surveyed said that they were satisfied with their most recent Web purchase and 91 percent said they are likely to buy from the same e-tailer again in the future.

A survey released last week by PricewaterhouseCoopers found that, even though customer satisfaction had slipped slightly from last holiday shopping season, 79 percent of this year's holiday shoppers reported being completely satisfied with the online shopping experience.

Waiting Room

Shoppers are turning to the Web because, according to Forrester, they "don't have enough free time to fight for a parking space or wait in line to make a purchase."

Search engines are a big favorite among Web shoppers -- and were used by 52 percent of Web buyers during their last online shopping session -- because they significantly reduce the time spent looking for desired merchandise. Forrester reported.

As an example, Forrester said that while it only takes seconds to visit Sears.com and type in "lawn mower," it would take much longer to go to a neighborhood Sears and search the aisles for a lawn mower.

Confidence Game

Online shopping also gives Web consumers confidence because it allows them to comparison shop to find the best deal . The study found that 65 percent of Web buyers who spent more than $100 on their last online purchase surfed the Web to compare prices before they bought.

Forrester also found that 74 percent of Web shoppers reported having confidence in the e-tailer from which they made their most recent purchase. In addition, 74 percent said that they trusted e-tail pure plays like Outpost.com and 77 percent said they trusted multi-channel retailers who operate both stores and catalogs, such as J. Crew.

Although consumers cannot control the entire online shopping experience, they do want the ability to monitor the progress of their purchase through the e-tailer's order fulfillment process.

Fourteen percent of Web buyers logged on to an e-tailer's site to use the site's customer service feature during their most recent Web purchase.

Saving Privacy

Consumers also want e-tailers to allow them to decide who has access to their personal information. Thirty percent of consumers said that they started shopping at an e-tailer because they knew would not sell their personal information and 14 percent have contacted an e-tailer to ask that their personal information be removed from the e-tailer's customer database.

Notably, 49 percent of respondents said they would shop online more if they were not concerned about protecting their privacy online.

The study found that 60 percent of online consumers want the government to regulate how companies can use consumers' personal information, an issue that is now on front and center for many federal legislators in the new U.S. Congress.

Despite Downturns

Although President George W. Bush has said that there are warnings of a "possible slowdown" in the economy, Forrester predicts that regardless of what the future brings, e-commerce will march forward and continue to grow.

"If the economy does slow down, consumers will sustain online retail through uncertain economic times," the Cambridge, Massachusetts-based research firm said.