Report: Q1 E-Commerce Matches Holiday Pace

Consumers spent $7 billion (US$) at online retail sites during the first quarter of 2000, including $2 billion on travel, according to a new report from Harris Interactive.

The numbers put the quarter in line with U.S. Department of Commerce (DOC) figures released in March for the fourth quarter of 1999. During those three months, which included the first holiday season when online shopping was widespread, consumers spent $5.3 billion. The government figure excludes online travel buying.

The DOC, which only began formally measuring online sales at the end of 1999, is expected to release its report on first-quarter e-commerce sales sometime this month.

Consumers Keep Coming

The report by the Rochester, New York-based Harris noted that the amount of offline spending generated by Internet activity such as online browsing and research dropped by more than $2 billion.

However, a new crop of online shoppers made up the difference. The number of consumers buying on the Web rose from 23.3 million during the fourth quarter of 1999 to 26.8 million during the most recent quarter.

Fewer Toys, More Travel

Sales dropped in several e-commerce segments, according to the report. Not surprisingly, toy sites saw the greatest decrease, with quarterly revenues down 61 percent from $379 million to $147 million. Also down were clothing, which dipped 17 percent to $619 million, and electronics, which fell 24 percent to $287 million.

“Clothing, electronics and especially toys all saw their online sales more than double during the holiday season but fall in the first quarter,” said Lori Iventosch-James, director of e-commerce research at Harris.

The drop in sales in many sectors, Iventosch-James said, points to one of the challenges that e-commerce firms face: To find ways to keep customers coming back year-round. “These drops are not just a function of decreased post-holiday demand,” she added. “They illustrate that online retailers face the same challenges traditional retailers face in sustaining themselves at other times of the year.”

Travel, which made up the largest single e-commerce category during the quarter with about $2 billion in sales, was also one of the biggest gainers, growing by more than 20 percent. Auction sites saw their revenues increase 30 percent, accounting for $644 million in spending. Spending was also up at health and beauty sites.

eBay Rises to New Level

Ivenotsch-James called the rising revenues at online auction house eBay “one of the biggest stories of the quarter,” because the online auction site showed strength in several categories, including electronics and toys. “Consumers are now thinking of eBay as a full-service e-commerce site,” she said.

The survey — which covered more than 112,000 shoppers worldwide — also found that Toysrus.com remained the number one toy site, despite widespread customer dissatisfaction with delivery of purchases over the holiday season.

Harris also found that ColumbiaHouse.com beat out previous leader Amazon.com for the lead in CD/Video sales.

The report seems to underscore the consolidation of market share that analysts say will lead to the demise of many second-tier online retailers. Just last month, Forrester Research predicted that more than half of all Internet retailers would fold by the end of next year.