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Online Holiday Shopping to Ring In $2.3 Billion

Shoppers are expected to spend $2.3 billion online during the 1998 holiday shopping season, up from $1.1 billion in 1997, according to a new research report.

However, the report, from Jupiter Communications Strategic Planning Services (SPS) unit, said that only 16 percent of online purchases are gift- related, representing a large untapped revenue stream.

While holiday sales will bring new customers, online retailers must view this boom season as an opportunity to increase the value of each existing customer by encouraging "self-buyers" to become "gift-buyers." Only 11 percent of online buyers reported that the majority of their online purchases were gift- related.

Nicole Vanderbilt, group director of New York City-based Jupiter's Digital Commerce Strategies research practice, said that as the online shopping market matures, commerce players will move from an acquisition strategy to a retention strategy. Companies should therefore use the gift-buying market as a way to increase their share of online buyers' wallets. "While online retailers have been successful in capturing dollars that consumers spend on themselves, they have been unsuccessful in getting the majority of those same customers to spend their gift dollars online," added Vanderbilt.

Jupiter said commerce players should develop features such as gift registries that leverage customer databases to maximize the value of their customers. "By providing an attractive service that is unavailable in other channels, retailers are able to both encourage incremental online spending and continue to develop their own all-important customer profiles," said Vanderbilt.

Jupiter's Strategic Planning Services (SPS) deliver analysis, primary data, and market projections to clients.