Study: Many Net Users Research Now, Buy Later

While industry experts continue to focus on sales as the key indicator of
e-commerce, they are overlooking the Web’s power to drive consumer
purchases in other
distribution channels, according to a new Ernst & Young study.

“Internet Shopping,” a special report produced by Ernst & Young and the
National Retail Federation, reveals that nearly one-third of consumers (32%)
with online access have purchased products or services on the Internet. Yet,
only 4% make more than 10 purchases a year.

Sixty-four percent of those with Internet access research products online and
later buy them through traditional channels–double the percentage of
consumers who research and buy the same products online. Overall, 90%
of consumer respondents said their online research is valuable in making
purchase decisions.

“The Internet is much more than a passive advertising vehicle,” said Brian R.
Ford, area industry leader of the Retail and Consumer Products Group of Ernst
& Young’s Philadelphia Practice. “Our research shows that the Internet
appears to be accelerating purchase decisions. Retailers and manufacturers
must understand this to unlock the incredible value of the Internet.”

Findings suggest that Internet shopping satisfaction continues to grow among a
majority of Web purchasers. Fifty-six percent said they like the Internet’s
ability to offer comparison shopping, 52% are happy with online merchandising,
and 50% said they enjoy the ease of navigation and the overall speed of
process on the Web.

Clearly, the main reason consumers shop on the Internet is convenience (53%).
At the same time, a large percentage of Web purchasers said that variety (46%)
and cost savings (45%) were key factors in buying on the Internet. Internet
security remains the biggest hurdle to prospective Web purchasers, with almost
70% reporting that they are uncomfortable sending their credit card number
through cyberspace.

The typical cybershopper is neither a teenager nor a computer “nerd.”
Instead, findings indicate that Web buyers are well educated, well paid, and
in their prime earning years. Sixty-four percent of online shoppers are
between 40 and 64 years of age; 68% of online shoppers are male.

Retailers are extremely optimistic on the profitability of their Web sites,
with more than two-thirds (67%) predicting profitability in the first year of
operation. Eighty-one percent of retailers project profitable Web sites within
two years.

The study consisted of comprehensive interviews with 850 consumers, 150
retailers, and 150 consumer products manufacturers about their current and
future Internet buying and selling activities.

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