Internet Commerce Increases as Security Concerns Abate

In 1999, 59% of online Americans have purchased via the Internet, up from 45% in 1998. Of those, 89% paid with a credit card. The number of Internet users with serious security concerns has fallen to 32% in 1999 from 46% in 1998. They also use the Internet to research discount airfares (54%) and find the factory-to-dealer price on a car they want to buy (48%). Eight in 10 (82%) have purchased a specific product at retail as a result of online research. Overall, 84% of online Americans have purchased at least one product online, up from 61% in 1998.

Although high-ticket items are not often purchased online at this time, 83% of Internet users regularly research high-ticket products online. More than half (53%) have researched automobiles and, of these, 41% purchased at retail as a result of their online research.  Almost as many (51%) have researched new computers online; of these, 83% purchased them at retail. Smaller proportions have used the Internet to research appliances (24%, of whom 72% purchased at retail) and furniture (8%, 53% of whom purchased at retail).

What People Buy Online

Computer hardware 42%
Non-game software 37%
Books 36%
Airline tickets 33%
Game software 32%
Catalog items 25%
Gifts 25%
Clothing/apparel 23%
Toys 15%
Sporting goods 11%
Cell phones/beepers/etc. 7%
Shoes 6%
Cosmetics 3%
Groceries 2%

Source: NetSmartAmerica

Overall, major reasons for shopping online include avoiding sales pressure (82%), shopping round the clock (74%), getting the best deal (74%) and getting the upper hand in negotiating price (64%).  Among high-ticket shoppers, top motivators are getting simplified information (91%), doing side-by-side comparisons (88%), saving time (86%) and having 24-hour access (83%). Getting the best deal is important to 44%. A quarter of consumers (25%) visit packaged goods sites. They are 57% female and 43% male and are looking for new products (94%), coupons and samples (78%), product use advice and recipes (77%) and nutritional information (69%).

Almost one third (32%) of those online watch less TV and spend less time on the telephone than they did before going online, 27% do less retail shopping and 19% less catalog shopping, and 17% spend less time perusing classified ads.

The three key online groups are newbies (online less than one year), integrators (online one to two years) and pacesetters, who have been online three or more years.  In 1999, 58% of newbies are women, up from 44% in 1998 and 18% in 1995. Both online purchases and credit card payments increase dramatically with years online; 71% of pacesetters have purchased online and 87% of those paid with a credit card; 54% of Integrators have bought online, of whom 50% paid with a credit card; and 38% of newbies have purchased online, with 33% using a credit card.

About 20% of those with Internet access do their banking online.  This includes 8% of newbies, 36% of integrators and 55% of pacesetters. An additional 35% are considering banking online.  One quarter (26%) also do their investing online, up from 12% in 1998. The breakout here is similar to that for banking, with 8% of newbies, 38% of integrators and 54% of pacesetters investing online.

The typical Internet user in 1999 is a 42-year old man or woman with $62,100 in household income. Three quarters (78%) are married and 51% have children living at home. Half (48%) have access at work and they spend an average of nine hours per week online from home.

Most Internet users (86%) are pet owners—45% have dogs and 36% have cats. A third of these (32%) would consider buying pet food direct from the manufacturer; a quarter (7% of all pet owners) would be willing to pay a 10%-15% premium for the convenience.

Banner ads have lost a great deal of their effectiveness, with click-throughs declining to 27% in 1999 from 53% in 1998.  Instead of surfing from site to site, online information seekers want Websites to aggregate all the relevant content for them.

Currently, 72% of Internet users find Websites through search engines and 47% through content aggregator sites. They also find sites of interest through word of mouth (44%), print magazines (39%), TV commercials (35%), newspapers (29%) and banner ads (27%).

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