Shopping Online Was Good for Most

SAN MATEO (01/31/2000) - It's beginning to look like the 1999 holiday shopping season was a success for big Internet retailers and their customers. The full holiday revenue picture won't be complete until e-commerce companies report their fourth-quarter 1999 earnings over the next few weeks. But my research associate, Senior Associate Editor Jim Battey, says that most studies and early estimates point to revenue increases of at least 100 percent over the 1998 holiday season. Some specifics are as follows.

* America Online Inc. said that from Thanksgiving to Christmas, $2.5 billion was spent via its Web site and online service, an increase of 108 percent over the $1.2 billion spent during the same period in 1998.

* In a preliminary announcement, Amazon.com said fourth-quarter sales were $650 million, a 157 percent increase over 1998's fourth quarter of $253 million. The company's quarterly earnings are expected to be released this Wednesday.

* Barnesandnoble.com reported fourth-quarter sales of $34 million to $35 million, a 215 percent increase over the previous year's sales.

* Overall, Jupiter Communications estimates that $7 billion was spent online between Nov. 1 and Dec. 31, an increase of 126 percent over the $3.1 billion it estimated was spent in 1998. PC Data Online estimated total online spending of around $8 billion between Oct. 31 and Dec. 26.

By PC Data Online's account, the busiest shopping period online was the week ending Dec. 12. That's different from the brick-and-mortar world, in which shoppers cram the stores in the days leading up to Christmas. Another difference is that online shops don't put everything on sale on Dec. 26, or they wouldn't have had such a steep drop in sales after Christmas.

One reason shoppers hit the online sites early was the well-grounded fear that the gifts wouldn't arrive in time for the holidays. And sometimes they didn't have a choice. On Dec. 16, I tried to order several cookbooks from the manufacturer of my Crock-Pot. They took the order but said it wouldn't be shipped until Jan. 3, because I had missed the cutoff date and they couldn't guarantee they would arrive by Dec. 25. Even after I explained that they weren't gifts and I didn't care if they arrived after Dec. 25, the company refused to ship the cookbooks until Jan. 3.

That may be a case of being too safe, but other online vendors are now sorry they weren't so conservative. Toysrus.com had to tell customers that some orders could not be delivered before Christmas, due in part to an unexplained computer glitch, and its parent company, Toys R Us, is now facing a class-action lawsuit.

Scattered inventory/fulfillment/delivery problems aside, Battey's research found that consumers across several studies reported high satisfaction with online holiday shopping. Here are some specifics.

* PC Data Online's study found that 97 percent of respondents said they plan to buy online again, with 96 percent expressing satisfaction with Web retailers' gift delivery and exchange processes.

* Jupiter found that 90 percent of online buyers were largely satisfied with their holiday shopping experience, and only 4 percent would decrease future online spending.

* A Greenfield Online study found that 89 percent of those who bought a gift online were extremely or very satisfied with their purchasing experience.

* Andersen Consulting found that 96 percent of those surveyed will use the Web next holiday season, and 72 percent plan to use the Net for day-to-day shopping in 2000. The top two complaints in this survey were that the products people wanted to buy were out of stock or weren't delivered on time.

The overall message from the past holiday season is that the Web is definitely a major commerce force. If your company is still in "wait and see" mode, you had better shift into "drive" before the 2000 holiday season. What commerce mode are you in? Send comments to sandy_reed@infoworld.com.

Sandy Reed is editorial director of InfoWorld and has been a technology journalist for more than 15 years.

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