A Good News, Bad News Story

Some interesting survey results out today show a good news-bad news scenario
for online shoppers during the recent holiday season.

The data shows that while 51 million U.S. consumers purchased a gift online
during the 2000 holiday season and average spending increased 62 percent from
the year before, another 16 million shoppers attempted to purchase online,
but failed. The result: An estimated $1.5 billion in potential sales, lost.

The research from The Boston Consulting Group and Harris Interactive
basically produced what the companies labeled “A Tale of Two
Christmases.”

“On one hand, we’ve seen very positive results — there was a greater number
of shoppers, who spent more and who were increasingly satisfied with the
experience,” said Lori Iventosch-James, director of e-commerce research for
Harris. “Yet, online retailers failed to capture the more than 16 million
consumers who attempted to buy a holiday gift online, but couldn’t complete
the purchase. These consumers represented $1.5 billion in potential sales —
and a missed opportunity few retailers can afford.”

By the end of the 2000 holiday shopping season, the number of consumers who
had purchased a gift online increased 28 percent from the 1999 holiday
season, the research shows.

And almost half of these consumers, 23 million, were buying holiday gifts
online for the very first time.

On average, online holiday shoppers spent $276 online — 43 percent more than
they had anticipated on spending going into the holiday season, and 62
percent more than the average online holiday shopper spent in 1999.

Satisfaction with the online shopping experience this past holiday season
also increased, despite continuing frustrations with the purchasing process.
Eighty-two percent of online purchasers indicated that they were satisfied
with the experience, up from 76 percent the year before. Yet, roughly half of
purchasers experienced a purchasing problem of some kind in 2000, a similar
proportion of purchasers who had experienced problems in 1999.

“Our survey shows that in the 2000 holiday shopping season, site navigability
and ease-of-use was less of a concern for consumers,” said Michael
Silverstein, BCG senior vice president and leader of the firm’s consumer
practice. “Back-end operations, however, continue to pose a significant
challenge for online retailers.”

He said most consumers who experienced a purchasing problem expressed a
continuing frustration with finding out that the product they ordered was
out-of-stock. And approximately five percent of gifts ordered did not arrive
in time for Christmas.

“The lost order has become the difference between the winning online vendors
and the losers,” Silverstein said.

Looking forward to the 2001 online retail year, the survey found that online
demand will continue to be strong. Already, 18 percent of online holiday
shoppers have also taken advantage of many of the post-holiday online
promotions, spending an average of $128 each on sale items in the weeks
following Christmas.

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