Traffic to E-Commerce Sites Dips

Traffic to leading e-commerce sites declined about 4 percent on average in
February, following an 18 percent seasonal drop in January, according to the
latest figures from research and measurement firm PC Data Online.


E-commerce leaders eBay and Amazon.com both posted relatively flat month over
month traffic levels in February, with eBay unchanged at 24.4 million
visitors and Amazon down 1 percent sequentially to 22.6. million visitors.


Goldman, Sachs analysts, in an advisory to clients, cited post-holiday
seasonality, a slow-down in the rate of consumers adopting e-commerce as a
shopping tool and a slower overall consumer spending environment as factors.


The year over year figures for the top e-commerce sites were impressive,
however, with February showing an average 63 percent gain from a year ago,
according to PC Data Online figures.


The post-holiday seasonal decline was amply demonstrated in January, when
total U.S. consumer spending for online purchases decreased from an estimated
$6.1 billion in December to $3 billion in the first month of the new year,
according to the latest NRF/Forrester Online Retail Index study by The National Retail Federation (NRF) and Forrester Research Inc. in
conjunction with marketing research firm Greenfield Online.


The decline in spending was mainly seasonal and not at all unexpected, the
NRF said.


The number of households online dropped from nearly 20 million in December to
13.3 million in January, the NRF/Forrester report said. They spent an average
of $228 per person in January, compared with an estimated $308 in December.


“The 50 percent decline in online consumer spending in January is exactly
what we would expect of the post-holiday season — not a reflection of how
consumers feel about shopping on the Internet,” said James L. McQuivey,
research director at Forrester.


Meanwhile, Reston, VA-based PC Data Online said that home Internet users
“stayed the course” in February and returned the top 10 Web sites to the
identical rankings as in January. Yahoo.com, aol.com and msn.com retained
their positions as the top three sites respectively in February, although
each saw slight decreases in unique user traffic.


What’s it all mean for companies in the struggling e-commerce arena? Goldman,
Sachs analysts said:


“We think that the shake-up and capital constrained environment that has
characterized 2000 will continue until mid-2001 as the overhang of the lack
of profitability, uncertainty of
business models, and cash burn rates will persist. Accordingly, we believe
that only companies with sufficient capital, clear market leadership,
scaleable infrastructure, and clear profitability profiles will see
sustainable price appreciation from a strong holiday season.”


GS said that it thinks the e-commerce industry will ultimately reach the mass
market and thereby drive an associated re-acceleration in traffic levels as
the online shopping experience improves via better customer satisfaction and
faster Internet access, among other factors…the question is how long it
takes.


GS said mass market adoption is defined as starting at 25 percent household
penetration, and analysts think e-commerce “is currently below this
threshold.”

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