November 26, 2002
Those Christmas bells are cash registers ringing up e-retail sales
WEST LAFAYETTE, Ind. Mall shopping will be as cold as reindeer noses, but Internet sales will be hot this holiday season, says a Purdue University retail expert.
"While store retailers face one of the weakest holiday retail seasons in 10 years, Internet retailers will set records," says Richard Feinberg, professor of consumer sciences and retailing and director of the Center for Customer-Driven Research.
He's quick to add, though, the statement needs context. Christmas e-tailing will total $16 billion to $19 billion, but that's only 5 percent to 6 percent of total holiday retail spending. Wal-Mart alone will have holiday sales in the $50 billion range, Feinberg says.
Internet shopping is growing fast. Feinberg estimates it will be up 25 percent over the 2001 holiday season. He expects traditional stores to be up only 2 percent over last year.
Another difference between walk-in stores and e-retailers is the length of the shopping window. This year there are 26 shopping days between Thanksgiving and Christmas. But because e-retail sales are mail order, Feinberg says they have to convince shoppers to buy between Thanksgiving and Dec. 14 in order to ensure delivery before Christmas.
Free shipping is both an inducement for consumers to buy and leads to more sales because of minimum purchase requirements, Feinberg says. Also, 10 percent to 15 percent more consumers have access to the Internet this year than last. This year about 40 percent of all Internet users will make at least one purchase, compared to about 30 percent last year.
A Yahoo-ACNielsen survey predicts the average e-shopper will spend $225 to $244 on the Net. The No. 1 reason to shop on the Internet is convenience, according to Feinberg.
Feinberg says shopping on the Internet is becoming a more pleasant experience for consumers because e-retailers are getting better at delivering on the promise of good merchandise, low prices and quick delivery. Research at Purdue's Center for Customer-Driven Quality suggests that e-consumers who had good experiences last year are 90 percent more likely to return to the sites they shopped at last year.
And Internet shopping begets more Internet shopping, especially as e-retailers gain more experience, he says.
"Internet retailers have been slowly and carefully building databases of information about their customers," Feinberg explains. "This information comes into good use as e-retailers are engaging in attractive e-mail marketing to that customer base."
Holiday shopping history is against online merchants, though.
"For the 20 years that we have been following the holiday shopping period, more than 50 percent of consumers wait until the last week before Christmas to shop for the holiday," Feinberg says. "No matter what retailers have tried to do, they have not been able to get these consumers to shop earlier.
"The real winners this season are the multichannel retailers those that have both Internet and store sites. Research at the Center for Customer-Driven Quality shows that consumers tend to do research on a Web site and then go in to purchase the item in the store."
Two other e-retail facts:
The busiest e-retailers are expected to be Amazon.com, eBay, Yahoo, msn eshop and J.C. Penney.
Most online holiday gift purchases will be made from work where people have access to fast Internet connections.
Writer: Mike Lillich, (765) 494-2077, email@example.com
Source: Richard Feinberg, (765) 491-5583, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; email@example.com