Report: $13.8B Spent in E-Holiday

Online spending reached US$13.8 billion during the 2001 holiday season, a 15 percent increase over the year before, according to a report from Harris Interactive (Nasdaq: HPOL), Goldman Sachs and Nielsen//NetRatings (Nasdaq: NTRT).

The eSpending report, which covers an eight-week period in November and December, appears to mark the end of strong growth years for e-commerce.

But it also comes amid lowered expectations and some forecasts of flat growth, said Lori Iventosh-James, director of e-commerce research at Harris Interactive.

“It’s not a bad number, but it’s nowhere near the growth of last year or the year before,” Iventosh-James told the E-Commerce Times. “People pulled back on spending overall and at the same time, the growth of online spending has started to reach the saturation point.”

Traffic Counts

The upbeat spending report also came just after Jupiter Media Metrix (Nasdaq: JMXI) reported a 50 percent surgefrom 2000 to 2001 in the number of visitors to online shopping sites. And several individual Web properties, including Yahoo! (Nasdaq: YHOO) and AOL have reported strong shopping seasons of their own.

Bigger Chunk

The eSpending report, which uses a weekly survey of 36,000 consumers to make projections, found that the percentage of overall spending consumers did online inched up from 13 percent in 2000 to 15 percent.

While that is a step in the right direction, Iventosh-James said, gaining a bigger share of each consumer’s wallet is what e-commerce has to focus on next.

“As the number of people going online starts to level off, e-commerce has to take a bigger share of people’s wallet,” she said. “Right now that’s not really happening.”

One challenge for e-commerce is that consumers in 2001 were clearly searching for bargains amid a slowing economy and rising unemployment. Internet shoppers expect to be able to find lower prices online, something that e-tailers have to reconcile with the need to turn a profit.

Meanwhile, other growth potential lies in largely untapped consumer segments, such as senior citizens and certain minorities, Iventosh-James said.

Shopping Blitz

The eSpending report also highlights just how short the peak e-commerce holiday season can be.

The research firms found that 65 percent of the total spending, or about $9 billion, was spent during the last two weeks of November and the first two weeks of December. Online spending peaked during the week ending December 14th, when $2.6 billion was spent. The percentage of Americans who made a purchase online peaked the week before at 20 percent.

Spending also dropped off quickly during the third week of December, a sign that many shoppers wanted to leave ample time for shipping and delivery.

Mostly Happy

Most shoppers had good experiences buying online in 2001, with 86 percent expressing satisfaction and 24 percent said they had a better experience in 2001 than the year before.

“While 1999 was nearly a disaster for customer service online, most major problems had been addressed in 2000,” said Sean Kaldor, vide president of analytical services at NetRatings. “With 15 percent spending growth this year, etailers were well prepared and able to deliver a consistent or even improved level of service.”

Keeping customers will be even more important in years to come, Kaldor said.

“The future of e-tailing will depend heavily upon how well merchants are able to maintain this consistent satisfaction level despite varying levels of spending growth and in the face of increasing demands for profit,” he said.