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Chapter 4. Chapter Understanding the Onl... > How Are People Shopping Online?

How Are People Shopping Online?

Although people are heading to the Web in droves to shop, and the number is increasing rapidly, there is still plenty of room for growth. Online retailing was expected to generate more than $36 billion (U.S.) in revenue in 1999 according to the Boston Consulting Group's study for shop.org. However, this report also said the top sites will attract a majority of this revenue. A study by the Peppers and Rogers Group/Institute says that by 2010, 29 million households in the U.S. will be heavy users of direct-to-consumer commerce. We suspect that number may be much higher as the Web rapidly matures—especially if less expensive Web appliances and gaming consoles like Sony's PlayStation II become key Web surfing machines for consumers.

Since 1997, when e-commerce really began to gel on the Web, people have been increasingly warming up to purchasing online. In the tenth GVU study of Internet usage, respondents purchased something on the Web on average less than once a month. However, the average respondent used the Web to influence overall purchasing decisions 1 to 2 times a month. In the sweet spot of Web users (ages 21 to 50) the rate of purchasing online is once per month or greater.

Planned shopping sessions on the Web also tend to be major. IDC reported in 1997 that cyber-shopping sessions are vigorous, with customers visiting an average of eight storefronts per session. Table 4.6 shows results from the latest GVU study of respondents bought.

Table 4.6. What Respondents to the Tenth GVU Web Demographic Survey Were Purchasing Online

How Much Money People Are Spending Online

Online shopping tends to trend toward larger scale purchases. This is partially due to a lack of a good technology that supports payments of $10 or less and that little in the way of sales taxes are collected on the Inter net. The GVU survey found that in the last six months prior to the survey, 38 percent of respondents had spent $500 or more online and that 33 percent had spent between $100 and $500. Meanwhile a Navidec survey reported that 53 percent of people on the Web in the U.S. have made an online purchase, spending an average of $206 per purchase.

Issues for Shopping Online

While shopping online grows, so too do people's issues regarding it. We previously mentioned concerns with the overall Internet experience such as privacy, government regulation, and navigation—but the tenth GVU Survey also focused on specific concerns about shopping online. Interestingly, quality of information, easy ordering, and reliability outranked security. Information about availability and the ability to make price comparisons also scored high on the list of user concerns. Again, we maintain that privacy is the real security concern, more so than credit card theft, although that remains an issue for the population as a whole. Once the fear of using a credit card online fades, users focus more precisely on site-specific problems they face when shopping. Many of these are information, and ease-of-use related. As you'll soon read, these go to the heart of the advantage people want from online shopping vs. shopping in the real world.

Another critical issue is customer service. Smaller online merchants who can personally get close to their customers, much like a small real-world store, can gain a critical competitive advantage. Statistics confirm this opportunity. In a recent survey, more than 52 percent of Web shoppers reported communicating (primarily through email) with merchants, yet this mail often went unanswered! This provides smaller merchants with a critical opportunity to gain sales through rigorous follow-up.

Shopping online is growing rapidly as security concerns drop, more merchants get online, and ordering through the Web becomes second nature. Yet, as the popularity of online shopping grows, merchants are quickly learning that they must address a number of key concerns to be successful. This is why it is important to understand psychologically why shopping online is so beneficial to consumers.

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