Studies Show Holiday Shoppers Moving Online

More shoppers than ever before logged on and made purchases over the Internet this past holiday season.

Online spending among Internet users skyrocketed during the 1998 holiday season, averaging US$629 per person - a 191% jump from the previous year's $216, Zona Research Inc. said today.

The Redwood City, California-based market research firm tracked more than 1,000 Internet users and found that the over-50 age bracket led the jump in online spending. Zona reported that online spending among consumers between 50 and 54 rose a whopping 545% and that those 55 and over spent 547% more this holiday season than they did in 1997.

Meanwhile, average spending among the 25-and-under crowd rose a relatively modest 36%, from $154 in 1997 to $210.

Overall, Zona found that men outspent women - doling out $707 as opposed to $543, respectively. However, the increase in online spending among women was more dramatic compared with last year, rising 308% vs. a 145% increase among men.

Meanwhile, America Online Inc. reported today that its members spent $1.2 billion with online retailers between Nov. 26 and Dec. 27 of last year. AOL, in Dulles, Virginia, said 1.25 million members also became first-time cybershoppers during the same period. The data was compiled for AOL by the Internet Research Group, an independent firm in Radnor, Pa.

Despite the apparent boon for retailers, however, most companies selling goods over the Internet still won't see a profit for at least the next 12 to 18 months, according to Giga Information Group in Cambridge, Mass. On the upside, the research company said an electronic-commerce effort - in addition to making it cheaper to do business - builds strong customer and supplier relationships, one key to long-term success.

Giga analyst Erica Rugullies said less than 5% of the companies selling merchandise online will eke out a profit over the next 12 to 18 months, although some will manage to break even as the result of strong sales during the recent holiday season. She added that Internet commerce will hit the mainstream when a "critical mass" of established firms are selling goods and providing services online.

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