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First the bad news: terrorist attacks, anthrax scare, war, recession talks and
slumping retail sales. Looks like the holidays isn't going to be as cheery as we
entrepreneurs expect.
(article continued below ...)
And the good news: Not so for the online entrepreneurs, says the leading
Internet market research firms. According to both Nielsen/NetRatings and Gartner,
worldwide online holiday shopping remains strong, and will even increase despite
difficult economic conditions and the events after September 11.
In a study done with Harris Interactive, among 36,000 online users, Nielsen/NetRatings
estimates that online shoppers will spend $9.9 billion this upcoming holiday
season, an increase of 43% from $6.9 billion last year. They also predict that
27% more people, or 106 million, will do their Christmas shopping on the
Internet this year compared to last year's 85 million online shoppers.
Table 1 Worldwide Internet Retailing Sales Forecast Estimate for Fourth Quarter
2001
(Billions of U.S.
Dollars)
|
Region
|
4Q01
Revenue |
4Q01 Market Share (%) |
4Q00 Revenue |
4Q00
Market Share (%) |
Growth (%) |
|
North America |
11.86 |
46.9 |
9.13 |
50.1 |
30.1 |
|
Europe |
8.58 |
33.9 |
6.15 |
33.7 |
39.6 |
|
Asia/Pacific |
2.46 |
9.7 |
1.60 |
8.8 |
53.4 |
|
Japan |
1.40 |
5.5 |
0.83 |
4.6 |
68.0 |
| Rest
of the World |
0.99 |
3.9 |
0.52 |
2.9 |
90.1 |
|
Total |
25.29 |
100.0 |
18.23 |
100.0 |
38.7 |
Note: Figures exclude
travel-related purchases and movie and event ticket sales. Source: GartnerG2
(October 2001)
The same results were forecasted by GartnerG2, a research unit of Gartner,
Inc. They estimate that worldwide online holiday shopping sales will grow by 39
percent compared to last year's levels.
However, much of this growth will not come from the North American market, as
the United States goes through a recession. The North American market is
projected to grow by only 30%, while the Asia/Pacific region will increase by
53.4%, and Japan by 68%. These figures should prompt merchants currently
shipping within the United States and Canada only to open their business to
international clients.
These numbers also indicate that the September 11 attacks are not deterring
people from buying online. GartnerG2 even goes as far as saying, "the
events of September 11 will have minor impact on planned spending." While
traffic may have slowed initially, e-commerce sales posted a growth rate of 54%
in September compared with a year before.
Both research agencies attribute their positive forecast to the increase in
online users, buyers and most importantly, "the experience level of online
buyers, which is the single most important predictor of online spending."
Confidence on the Internet as a commercial medium has grown, as consumers see
the convenience, speed and information capabilities that buying online brings.
As a result, barriers to online shopping such as credit card usage and safety of
personal information appear to be lowering.
In terms of products sold online, apparel will remain as the most popular
item on the Internet, with revenues projected to be around $2.5 billion for the
months of November and December. The study does not include travel services.
Clothing is consistently a top revenue-generating sector in e-commerce,
proving that people have grown comfortable with the idea of buying clothes
without first trying them on. A number of top merchants have also successfully
integrated their e-business strategy with their catalog business.
Table
2. Top 5 Categories Ranked by Online Spending,
November and
December 2001
| Category |
Estimated
Online Spending (in millions) |
| Apparel |
$2,445 |
| Books/Music/Video |
$1,696 |
| Auctions |
$1,364 |
| Toys |
$1,053 |
| Computer
Hardware |
$973 |
Source: Nielsen/NetRatings
and Harris Interactive
Books, music and video will also remain popular with online buyers. Auctions
continue to enjoy a strong presence on the Web. Toys and games, which
historically leads e-tailers in traffic growth during the holiday season, is
projected to enjoy a $1.05 billion spending this holiday season.
Table
3. Top 5
Categories Ranked by Estimated Traffic Growth for Holiday Season 2001
| Category |
Estimated
Traffic Percent
Growth
(Aug - December 2001) |
| Toys
and Games |
250% |
| Consumer
Electronics |
113% |
| Value-Oriented
Sites |
73% |
| Virtual
Department Stores |
57% |
| Apparel |
46% |
Source: Nielsen/NetRatings
and Harris Interactive
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