According to a just-released Jupiter Communications report, 90 percent of online shoppers said they were “largely satisfied” with their 1999 holiday season experiences on the Web.
Despite the well-publicized problems that consumers had with online traffic overloads, site crashes, poor customer service and failed deliveries, Jupiter reported that consumer satisfaction increased from 74 percent during the 1998 holiday season.
Sales Reach $7 Billion
Jupiter estimated total holiday Internet sales at $7 billion (US$), which is higher than the $5 billion reported yesterday by PC Data. Earlier this month, e-shopping estimates for the holiday season ranged from $8 billion to $13 billion.
Discrepancies can be attributed to variances in research techniques, differing views of what actually constitutes Internet sales, and variations in the dates used to mark the holiday sales period. In the end, however, all researchers said that the 1999 holiday season posted a big gain over 1998.
Still, even with numbers that soundly beat the previous year’s sales, online sales remain a small fry when compared with overall retail sales. Even the high 1999 estimate of $13 billion represents a paltry fraction of a percent of the overall 1999 estimate of $3 trillion in holiday sales.
Shopping To Continue
Jupiter’s results, which came from a survey of 810 people who shopped online between November 1st and December 31st, found that only four percent of online buyers said they would decrease their Internet spending during 2000 because of their 1999 holiday shopping experiences.
Thirty-five percent said their experience encouraged them to buy more in 2000 than they previously anticipated.
Ad Expenditures and a Roaring Economy
Jupiter attributed the successful season to large marketing expenditures that drove 25 million Internet users to Web stores. A strong U.S. economy was another factor that led to an overall healthy holiday retail season for both online and offline merchants.
Jupiter also pointed out that many e-tailers induced shoppers with aggressive price promotions, and in many cases, extras such as free shipping and gift wrapping.
“Holiday promotions were a necessarily evil in the 1999 holiday season,” said Ken Cassar, an analyst with Jupiter’s Digital Commerce Strategies research practice.
Bumps Along the Holiday Road
Lest anyone forget, the 1999 e-tailing season still had plenty of problems. Although general satisfaction increased considerably over 1998, unhappy shoppers cited difficulties such as inventory shortfalls, high shipping and handling costs, and slow site performance.
One e-tailer, Toys “R” Us, is facing a class-action suit from shoppers who ordered gifts early in the holiday season and did not receive them before Christmas.
Profits Will Have to Wait for a Future E-Holiday
The fourth-quarter results coming from most e-tailers show losses, even from heavily visited sites such as Amazon.com and Toysrus.com.
“The goal of this holiday season was not about generating impressive sales numbers, but rather about developing relationships with new customers and securing long-term relationships,” said Cassar. “The next step for merchants is to determine how they can impel holiday customers to make their next purchase and to do so at the lowest cost possible.”
With today’s fierce online competition, however, it is questionable whether online merchants can leave their price-slashing and free services behind in order to turn a profit.