RealTime IT News

The Need for Value Drives Consumers to Internet

With at least three independent surveys indicating that consumers will spend less on gifts this holiday season, the need to maximize dollars is driving shoppers online to e-tailing websites in droves.

Amazon on Friday reported that customers worldwide have already ordered more than 24 million items for the period of Nov. 1-28, according to its Holiday Delight-O-Meter. Because the Delight-O-Meter debutted Nov. 9, 2001, no year-ago comparison is available. While the online shopping giant attributed the surge to a number of heavily discounted items, experts said the decision by the company (as well as its competitors like eBay) to stick with free shipping as a promotional tool also helped attract shoppers.

"Methods to further reduce spending levels are clearly popular with consumers this year," said Lee Smith, president of Stamford, Conn.-based InsightExpress, a professional online marketing research firm. "Free shipping, greater discounts, and price comparisons are emerging as critical success factors for online stores this holiday season. The successful sites understand this."

As further evidence of recent trends, on Friday FAO Inc., the operator children's retailers FAO Schwarz, The Right Start and Zany Brainy, said it did not expect to meet its previously issued revenue and earnings guidance due to restrained consumer spending.

Further hurting mall-based and department store sales was the benefit for online shoppers of price-comparison services like Pricegrabber and Dealtime, which Nielsen//Netratings recently ranked as the third most-popular shopping sites on the web.

And, according to company officials, this ability for the consumer to click to compare prices is an added benefit for the partner merchants listed on Dealtime's service. By increasing the knowledge base of shoppers and raising their level of comfort with transactions, Dealtime claims to generate a visitor-to-buyer conversion that is roughly twice that achieved by competing sites.

Meanwhile, Microsoft said on Friday that traffic to the MSN Shopping service is up 50 percent this November, as compared to the same time last year.

Traditional "bricks" retailers this year do have a leg up on their online counterparts in terms of the limited number of days shoppers have during the holiday season. The 2002 holiday shopping season (Thanksgiving to Christmas) lasts only 26 days -- that's six fewer days consumers have to complete their holiday shopping compared with 32 days in 2001, meaning less time to wait for orders to be shipped and delivered.

But in a study conducted by Harris Interactive for Amazon.com, nearly 70 percent of Americans said crowded malls and long lines were the worst part of holiday shopping. If everyone had a magic genie to either go to the mall, send holiday cards, wrap or send gifts or attend holiday parties for them this holiday season, two in five Americans (40%) would want that genie to go shopping at the mall, the Harris poll said.

Harris Interactive conducted its study via telephone with a regionally representative sample of 1,000 Americans ages 18 or older between October 25 and October 28, 2002. The margin of error for the total sample is plus/minus 3.1 percent.