Online retailers try to determine who's shopping and who's shopping around.
By DAVE GUSSOW
Published November 22, 2004
[Times art: Amanda Raymond]
Click to view interactive online retailers graphic.
For people such as Jim Nicholson, Thanksgiving marks the end of the holiday shopping season, not the beginning.
He goes online, not to the mall, to make his purchases. And he starts early.
"I get it over and done with in no time," said Nicholson, 25, of Clearwater. "I had all my Christmas shopping done (last year) before Thanksgiving."
But not everyone who shops online buys online.
Craig McCorkle, 56, of Seminole, is comfortable with online security and often browses the Web to check out products, but he prefers to spend his money in malls and stores where he can touch the merchandise and get the immediate satisfaction of carrying it home.
"The gut rules the day," McCorkle said. "One hundred people could tell me that shopping online has been a wonderful experience. That doesn't do it for you. What does it for you is the gut."
The picture for online retailing is more complicated than the often-touted benefits of easy information, wide selection and doorstep convenience. It's also a work in progress. Shoppers are still learning how to use Web sites to help them shop. And retailers are still learning how to market and sell online.
One thing is clear: The market of online consumers is big. Depending on the survey, estimates for the number of people who shop online range from 86-million to more than 100-million.
"More and more people, as they get comfortable, are shifting their purchases from stores and catalogs to online stores," said Jeffrey Grau, senior analyst at the eMarketer research firm in New York.
But, according to Forrester Research, 82 percent of Web shoppers say they prefer to make their purchases offline. Most often, price is the deciding factor, with almost two-thirds of shoppers saying they go where they get the best price. While the Web was long seen as the cheapest venue for buying goods, that perception has eroded as consumers take into account things such as shipping fees. Shoppers now use the Web to do comparisons and may wait before making a purchase.
In addition, other issues linger that may make some consumers hesitant to shop online. In particular, the security of credit card transactions, identity theft and protecting personal information remain nagging problems for consumers, particularly with this year's epidemic of spyware and other malicious code.
"I just don't like the idea of my credit card numbers or bank card numbers being typed into a machine when I don't know where they're going," said Barbara Brooks, 58, of Clearwater, who does not shop online.
Though surveys show security fears diminishing, it's important for retailers to do more consumer education to reassure people about the safety of their transactions, says Donna L. Hoffman, co-director of the Sloan Center for Internet Retailing at Vanderbilt University.
"Credit card information is not any more secure offline and, in fact, might be much less secure," Hoffman said. "And just as much personal information is captured at the point of sale offline."
Retailers are still refining how to sell on the Web, although 79 percent of online retailers were profitable last year, up from 70 percent in 2002, according to Forrester.
Projections for this year's online holiday sales again show healthy increases: JupiterResearch predicts a 19 percent increase to $21.6-billion; eMarketer expects a 29 percent increase to $16.7-billion; Forrester Research estimates a 20 percent rise to $13.2-billion. (Estimates vary because some reports include all of November and December; others just Thanksgiving to Christmas.)
The numbers are impressive, particularly when compared with 1995's $300-million in sales, according to JupiterResearch. But the sales totals are still dwarfed by traditional retail spending, and the online numbers are increasing because more people are shopping, not because individuals are spending more. Per-buyer spending this year is actually down $7 from 2002.
As shopping patterns have begun to emerge, they have begun influencing when and how retailers offer promotions to attract customers, including stores that use their Web sites to complement their "brick and mortar" operations to keep customers. That could mean offering online coupons for use in stores or getting coupons at a store kiosk for use on the Web.
More than half of online shoppers, such as Nicholson, begin their quest before Halloween, not after Thanksgiving, according to a study by Shop.org, an association of online retailers, and BizRate.com, a shopping search engine.
So early in the shopping season, free shipping and discounts are highlighted as people hunt for good deals. As Christmas nears, though, free upgrades for shipping and guaranteed delivery attract shoppers more worried about gifts arriving on time.
Another element of the fractured nature of online shopping is a gender gap.
"Women are looking for ideas and are looking also for special prices or promotions" said Patti Freeman Evans, an analyst at JupiterResearch. "Women tend to be more intense shoppers, (do) more research, (are) more price sensitive. It's more important to get a deal or bargain."
Men don't go for promotions and pricing specials as much, she said. Instead, they use their Web browsing time to focus on research and learning more about products. They also differ in what they buy: Women most often purchase personal care, home and family products, while men go more for electronics and entertainment items.
There is some agreement on how the Internet is used for shopping: research, planning, gift ideas, product searches and price comparisons. Only 45 percent of shoppers know what they're going to buy when they go online, according to JupiterResearch.
And the numbers go down when it comes to knowing details of a purchase, including price, brand and where they're going to buy.
That means people are looking online, buying offline, forcing retailers to come up with what the industry calls "cross-channel promotions" to keep their customers. That could mean features such as ordering online and picking up the merchandise in a store, or returning an item to a store after buying it from the retailer's Web site.
That wasn't the case in 1999, generally considered a disaster for online retailers when sites crashed, promised deliveries missed deadlines amd inventories didn't match demand. Unknown startups tried to make a name with TV ads, including the famous sock puppet for the defunct Pets.com.
Yet it was Toys "R" Us that became the poster child for disaster that year. Among other things, a November promotion for free shipping attracted so many visitors that 40 percent of them couldn't get access to its site.
The problems were capped off Dec. 21, when the company said about 5 percent of $39-million in orders wouldn't make it in time for Christmas.
"There was a lot of inexperience," Vanderbilt's Hoffman said. "There also were a lot more consumers coming online. Online retailers were just not prepared."
Many of those kinks have been resolved, especially as well-known, experienced retailers such as Wal-Mart, Target and Sears beefed up their online presence.
Finding information on products is easier, with improved search functions a highlight this year. Many have made it easier to calculate shipping charges, and inventories usually are adequate.
But some features have flunked, such as sections for gift suggestions, and it's not clear why.
"We still don't fully know how consumers want to shop on the sites," Freeman Evans said.
- Information from Times files was used in this report. Dave Gussow can be reached at gussow@sptimes.com or 727 771-4328.
