Report: Offline Merchants Had Better Get With It

Traditional real-world merchants who do not provide an e-commerce channel to
their customers risk losing market share to their competitors, according to a
new series of research reports from International Data Corp. (IDC).

With the online population looking more like the overall U.S. population,
companies must serve their customers online or their competitors will do it
for them, the reports conclude.

“Online users have become a nation within a nation,” said Jill Frankle,
program manager in IDC’s Internet and e-commerce strategies research program.
“Merchants can no longer ignore the impact of the growing online population.
As the percentage of PC households accessing the Internet increases, e-
commerce in the U.S. also grows exponentially.”

The growth of the online nation means the scope of the Internet is constantly
changing. Nearly 40 percent of home online users reported that they have been using
the Web for only six months or less, and nearly 60 percent stated that they have been
using it for only the last year. IDC forecasts that by 2002, 60 percent of the home
online user population will be new users who were not online in 1998.

The online population is broadening beyond just the young, wealthy, urban, and
male. Households with children display strong online usage; about one out of
every three households with children has online access, the reports said. The
percentage of women online is nearing parity with the overall population,
increasing from 43 percent in 1997 to 48 percent in 1998.

Another important segment that will grow in 1999 is online buyers, the reports
predict. These users are more engaged by the Internet as a whole, are more
price sensitive, are heavier users of news and information, and are concerned
about easier navigation on the Net.

“Now is the time for traditional merchants to offer an e-commerce distribution
channel if they do not want to get left behind. If they do not, they run the
risk of losing market share to the more savvy marketer. The strength of the
Internet should not be underestimated,” Frankle said.

“For those who are experienced online merchants, they would be better served
to focus their marketing efforts on the basics. This includes price, customer
service, site performance, and easy navigation,” said Barry Parr, research
director in IDC’s Internet and e-commerce strategies research program. “We
believe that the best prospects for online customers lie among those who have
already purchased.”

The series of Online Nation reports consists of the following three reports:
1998 U.S. Internet User Survey, The Buyers and The Homesteaders. The reports
are available for purchase by e-mailing Janis Dempsey. Pricing was not disclosed.

IDC’s research and opinions are based on the results of more than 300,000 end-
user surveys, in-depth competitive analysis, technology coverage, and
strategic analysis.
IDC is a division of International Data Group.

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