According to Retail Forward, 88 percent of Internet users reported shopping for gifts at online shopping sites during the 2001 holiday season, up from 78 percent in 2000. Many of those shoppers logged on intending to purchase, with 38 percent of online shoppers saying their primary use of online shopping sites this holiday season was to purchase gifts either shopped for or found online or in catalogs. The most common reason mentioned for not making a purchase online was the availability of better prices and deals at stores.
"Stores promoted early and heavily this holiday season due to the challenging economic environment, luring some value-conscious shoppers away from the online channel," said Mary Brett Whitfield, director of Retail Forward's E-Retail Intelligence Program.
Customer Service Improving for Online Shoppers
Customer service made significant improvements for the 2001 season, with an impressive 72 percent of online holiday shoppers satisfied with all of their online holiday gift shopping experiences, up from only 55 percent in 2000. The year 2000 also saw 42 percent of online holiday shoppers say they were unsatisfied with at least some of their online holiday shopping experiences, while only 27 percent of shoppers had the same feeling in 2001.
Almost two-thirds (63 percent) of online holiday purchasers had no problems with their online purchases during the 2001 holiday season, Retail Forward found. Of those shoppers who did experience problems, no one problem stands out as particularly prevalent. The most frequently cited problems were online holiday purchases not received in time for the holidays or needing to pay extra for shipping to ensure an on-time delivery (both cited by 15 percent of online holiday gift purchasers), followed by failing to receive adequate e-mail communications regarding order status and shipment delays (8 percent).
"As online shopping continues to evolve, only the most efficient operators can survive," Whitfield said. "During the 2001 holiday shopping season, efficient operators provided online shoppers with higher levels of customer service compared to prior years, helping to make online shopping more mainstream by removing some of the fear previously associated with shopping the channel."
A mystery shopping study conducted for the Direct Marketing Association (DMA) by E-tailing Group, Inc., found that companies have taken a number of steps that make it easier for consumers to buy online.
"Marketers are using time-tested direct marketing techniques on the Web to improve customer service and retention," said H. Robert Wientzen, president and CEO of The DMA. "This study showed that during the recent holiday season, marketers did an impressive job of delivering excellent customer service and addressing factors that disappointed some consumers during the 2000 holiday season."
The study, in which one product was purchased from each of 100 e-commerce sites in 16 product categories, found that companies reduced the average number of clicks to checkout in 2001 to 5.36 clicks from 8.76 clicks in 2000. More than half (54 percent) of sites offer real-time inventory status, compared to 42 percent a year ago. The percentage of sites offering gift searches rose from 14 percent in 2000 to 46 percent in 2001.
E-tailers have also made privacy is a priority; 90 percent of sites link to privacy policies directly from the home page. Eighty percent of sites sent e-mail shipping confirmations, up from 54 percent in 2000. Seventy-nine percent of sites enabled customers to check their order status online. Almost all (99 percent) of sites provided toll-free numbers for customer service.
Merchants are also paying attention to infrastructure issues. Orders were successful on the first attempt on 93 percent of sites.
More Online Shoppers, More Online Spending in Canada
Online shoppers in Canada spent an average of $324 online for gifts, totaling an estimated $1.16 billion in spending, according to Ipsos-Reid. This exceeded projections by 34 percent, and represents a 78 percent increase from the estimated $650 million that was spent for gifts online during the 2000 holiday season.
The increase was primarily due to more people shopping online than expected, and a slight increase in the average amount spent by online shoppers. Before the holiday season, 2.9 million Canadian Internet users said they would definitely or probably buy online during the holiday season, but 3.6 million actually did.
The growth also narrowed the gap between Canadians' and Americans' propensity to purchase online. Estimates of U.S. online expenditures during the 2001 holiday season range from $9.5 billion to $12.4 billion, resulting in an estimated $52.20 spent online per American adult. The Canadian equivalent was $49.75, resulting in a gap between the countries of $2.45. Last year's gap was $15.43.
Also of good news for Canadian e-tailers is that 92 percent of online purchasers said they are likely to purchase online during the next holiday season, and 35 percent of repeat buyers said their online purchasing experience this year was better than last year, versus only 4 percent who say it was worse.
The most popular online holiday purchases were similar to 2000, including books (37 percent), CDs, tapes or videos (27 percent), clothing (23 percent), toys or games (18 percent), computer software (15 percent) and a whole range of other miscellaneous items.
"All in all it is a very positive story," Ferneyhough said. "You have more people buying online, they are spending more than they expect to, they plan to come back and do it again, and the whole experience is improving. In light of the tough 2001 faced by so many e-tailers, leaner and meaner appears to be working."