RealTime IT News

Report: $3.5 Billion in Online Purchases Predicted in Q4

Consumers will establish a new ceiling for online retail sales this quarter, making $3.5 billion in purchases via the Internet by the end of the year, according to new projections from Forrester Research Inc.

Forrester said it expects consumers to turn to the Web in record numbers to fulfill their holiday gift-giving needs. A significant number of consumers are expected to make their first online purchases this holiday season, making 1998 "a pivotal year in the evolution of e-commerce."

Maria LaTour Kadison, senior analyst in Forrester's Online Retail Strategies service, said that tough competition among retailers combined with aggressive advertising in traditional media by e-retailers will attract consumers looking for prices, products and convenience.

"Holiday shoppers traditionally face long lines, crowded aisles, absent or unhelpful sales clerks, and uncertain availability," said Kadison. "The Web offers the ability to find the best prices and multiple delivery options without the hassle of shopping in malls and stores. In a way, the Web restores some of the holiday gift-buying experience."

Three trends will emerge from the 1998 holiday buying season, Forrester said:

  • Major retailers like eToys, Gap and L.L. Bean will leverage their brands to capture loyal customers online. To make gift shopping easier, these retailers will offer gift searches based on the recipient's age and gender, as well as the giver's price range.

  • The leading portals will offer holiday shopping channels that aggregate vertical retailers and gift sites, making it easier for shoppers to find gift ideas and place orders.

  • Dedicated gift sites like 911gifts.com and eGift.com will attract shoppers who need help or guidance with advisory services and searches by occasion, recipient, type of gift, and price range.

Converted holiday shoppers will continue buying online in 1999, as e-retailers look for new ways to capture consumers and spread sales throughout the year. Forrester said it expects increased use of e-mail reminders and gift-of-the- month services to lure consumers back to the Web for post-holiday purchases. Meanwhile, portals will focus on improving their retail services, offering one-cart shopping that enables consumers to use one cart and make one payment while shopping at multiple affiliated retailers.

"Last year, online retailers did not experience the traditional post-holiday drop-off in sales," Kadison added. "Forrester expects to see a similar ratchet effect again this year as consumers keep coming back to the Web for more and more purchases in 1999."

Forrester's report inflates the $2.3 billion holiday sales prediction made by Jupiter Communications. Both firms predict a huge growth from last year's sales of $1.1 billion.