Online Shopping: Exceeding Expectations

While online revenues generated by North American-based retailers for the first six months of 1998 were $4.4 billion, full-year online revenues for retailers will surpass $13 billion, according to a new study by The Boston Consulting Group (BCG) for the online retailers organization shop.org.

What’s more, multichannel retailers migrating to the Internet account for the bulk of online revenues, the survey said. Multichannel retailers like Dell Computer, Charles Schwab, Eddie Bauer and Lands End, account for 59 percent of revenues.

Wide Chasm Between Online Holiday Shopping Studies

One week after new media research firm Jupiter Communications predicted that online retail sales for the holiday season would top $2.3 billion, eMarketer estimates that number will be only $1.1 billion.

eMarketer "statsmaster" Geoffrey Ramsey said different methodologies used by the two companies could possibly have contributed to the $1.2 billion lost between the two reports. He said while eMarketer looked at several sources for its figures, Jupiter extrapolated projections directly from retailers’ projections. "The problem is that (Jupiter’s) numbers are self-reported (by companies), which tend to be more optimistic."

The definition of an "online purchase" may be different between the two companies, or between eMarketer and its competitors. eMarketer uses a tight definition, which states that an online purchase must be electronically initiated, and have the opportunity to be directly completed while online. A transaction completed via a phone call is also counted by eMarketer as an electronic transaction, Ramsey said.

People who conduct research for products online and then go to stores to make the purchase — a definition some research firms use, — are not counted by eMarketer. The company is typically conservative among the noted research firms when it comes to reporting figures, Ramsey added.

Jupiter Communications reported that 1997’s holiday season saw spending of $1.1 billion. Even though online shopping revenues are going up, only 16 percent or $368 million of that $2.3 billion is expected to come from gift-related purchases.

eMarketer looked at its recent eCommerce Retail Shopping Report — which took its numbers from looking at several research organizations’ survey results, including Jupiter —along with the just released National Retail Federation (NRF) survey conducted by Deloitte & Touche, Ramsey said. The NRF’s "Mood Survey" predicted that Americans will spend a total of $173 billion this November through December holiday season, up 4.5 percent from last year. According to the survey, consumers expect to spend an average of $814 on holiday spending this year.

The company also predicted that online holiday spending will account for 29 percent of US e-commerce revenues during the November 1998 through December 1998 period. Online revenues are expected to total $3.8 billion for all of 1998, according to eMarketer. The total holiday online sales figure, though, will represent only 0.6 percent of total retail spending for the season. And among those shopping online, the average net consumer will spend $76 in buying products online, which represents 9.4 percent of their total holiday expenditure of $814, eMarketer also estimated.

Ramsey expects the $1.1 billion holiday revenue figure to double in 1999, as more e-commerce outlets improve their systems.

eMarketer’s eCommerce Retail Shopping Report is available at the eMarketer Web site, at http://www.emarketer.com.

(Contact: Gary M. Galati, eMarketer, 212-677-7137)