Online shopping bonanza hits US

If a television was on during December, it was impossible to avoid the barking voice intoning one of the more memorable Web shopping addresses in America. Every station in the San Francisco area seemed to be running the advertisement for this hardhitting new Internet shopping "portal" site - a site to which Net users are supposed to flock because it offers a number of services - in this case, everything from computer hardware and software to books, videos and games.

Buy.com is also a good metaphor for what Americans did in droves throughout the holiday season. In an online shopping bonanza which proved that millions are more than willing to point and click their way to merchandise purchases, Americans forked out somewhere between $2 billion (#1.71 billion)-$5 billion (#4.28 billion), according to various analysts' post-season estimates. Most seem to settle on figures around $3.5 billion.

That's nearly three times the amount of last year's fourth quarter online retail sales figures, which stood at $1.3 billion, according to analysts Forrester Research. Online retailers from Disney.com to 1-800FLOWERS.com to clothiers Eddie Bauer reported increases of at least 300 per cent in purchases over last year and some sites, like upmarket gadget sellers Sharper Image, said sales had jumped 600 per cent.

Internet service America Online, with over 15 million members, said some $1.2 billion in sales were driven through its online shopping site during the holidays, a 350 per cent increase on 1997. The number is significant because AOL tends to attract a mainstream membership of people new to the Internet, not the more experienced Net surfer who, in the past, would have been far more likely to make an Internet purchase.

Likewise, big portal sites like Yahoo! and Excite, which promoted their online shopping sites with such gimmicks as an online celebrity Christmas shop-a-thon (in the case of Excite), said they expected increases of at least 300 per cent in purchases made through their retail partners.

"Internet-based commerce is beginning to encroach on retail as a viable shopping experience for increasing numbers of Americans," according to Mr Jack Staff, director of Internet analysts Zona Research in Redwood City, California.

A post-holiday survey of 1,000 Internet users by Zona and researchers IntelliQuest details a number of important shifts in buyer habits and attitudes which helped see individual online Christmas spending jump by more than 270 per cent last year, from $216 in 1997 to $629 in 1998. Many of those buyers were first timers - 58 per cent bought nothing at all online in 1997. Just over a fourth of all holiday purchases were made online by the sample group, with people in the 35-44 age group buying a third of their gifts over the Net.

In an interesting shift, the largest growth in online purchasing was amongst people over 50.

Spending for 50 to 54 year olds in the sample group grew almost 600 per cent ($626 compared to $97 last year), while spending for those over 55 climbed to $1527) compared to $281 in 1997). In contrast, the under-25s spent only 36 per cent more than in 1997: $210 compared to $154.

Another online demographic surprise was the dominance of women in the marketplace. Although women comprise somewhere between 40 to 45 per cent of the online audience, they made the bulk of online purchases during the holidays, according to Marketing Corp of America.

Significantly missing this year was the rash of stories about consumer wariness at using credit cards online. Until now, such hesitancy has been widely assumed to be one of the main inhibitors to the growth of consumer e-commerce. Despite the continuing lack of a single set of standards for security systems for online transactions, people apparently were willing to type credit card numbers into websites.

But while American online retailers are basking in the warmth of those holiday figures, European retailers are increasingly in danger of being left out in the cold. New figures from UK analysts Fletcher Research claim that American retailers based in Britain already have snapped up a third of the UK's $380 million online sales market.

According to Bloomberg News, Travelocity, one of the largest US online travel sites, established a UK site three months ago and is now the top online travel site in Britain, pulling in 40 per cent of all online ticket sales in the country. Of the UK's 100 largest retailers, say UK analysts Verdict Research, only 47 have websites and only 14 of those conduct retail sales online. That's left the door open for American retailers like Barnes and Noble, Amazon.com and Borders, all of which now have UK bookselling sites.

And, if purchases can't be made in one's home country, Europeans seem willing to order abroad. Another study late last year estimated that half of the traffic generated at some of the largest American online retail sites is coming from Europe.

Brussels will find those numbers disturbing. As the European Commission struggles to jump-start the European Internet industry and online commerce through a range of initiatives and programmes, America's post-holiday e-commerce figures Are unlikely to bring any tidings of comfort and joy.