The Rumors of Ecommerce Death

As Nasdaq sputters along in dot com shame, a few million few dogged Internet
consumers have ignored the crash. They continue to happily buy away. The
good-news story is not popular with business writers, but Web retailing
continues to grow seemingly unaware that the online mall is crashing down
around them as they choose garden tools, sell sports cards and order vacation
packages. Things aren't perfect. There has been somewhat of a dip since
Christmas, but I think most Net retailers can live with a post-holiday. <
r>Retailers have weathered after-Santa blues since the English switched from
wassailing to kids toys in the mid-1800s.

We decided to take a look at recent reports on Internet retail sales just to
see if the Net stock gloom was blunting the steady expansion of online
commerce. We found some softening in the rate of growth, but we certainly
didn't find any contraction in consumer behavior. The shrinking effect right
now seems limited to the number of dot coms rather then the number of
consumers. In fact, if you subtract the bizarrely heightened expectations for
the Internet, its growth is coming along just fine. By any standards other
than the Net-boom mentality, Internet expansion continues to be fairly
spectacular.

Net buyers hit ten quarters of continuous buying

Greenfield Online reported that for 10 consecutive quarters, 60 percent of
U.S. Online consumers have made at least one purchase on the Web within a
90-day period. And 28 percent of these shoppers have clicked on Internet ads
while shopping. Not surprisingly, those with an annual income of $50,000 and
above are more likely to purchase goods (81 percent) than those whose income
is below $50,000 (64 percent). Women on the Net buy at a slightly higher rate
(74 percent) than men (71 percent). The top categories of goods continues to
be books and CDs, followed by clothing, toys and computer software.

Rich buyers seek service basics online

Forrester Research looked at the shopping habits of rich consumers, those
with investable assets on $1 million or more, and found that these shoppers
are more interested in strong basic serve than they are in virtual
exclusivity, extravagance and entertainment. Affluent shoppers have been
buying linger, feel more comfortable buying, buy more frequently and, of
course, spend more money," said Ekaterina O. Walsh, a senior analyst at
Forrester. "They buy online for the same reasons for the same reasons that
all online buyers do and care about price and positive experiences with Web
stores." Forrester recommends that sellers of luxury goods should concentrate
on purchasing ease and a convenience return process.

Visitor traffic dips

PC Data Online found that traffic to leading ecommerce sites declined about 4
percent in February following an 18 percent seasonal drop in January. Goldman
Sachs analysts cited port-holiday seasonality, a slowdown in the rate on new
consumer adopting ecommerce and slower overall consumer spending as the
factors in the slower month-by-month growth of Internet retailing. However,
this year's figures are up 63 percent over last year. Hey. Did anybody see
that? I'll say it again. We're up 63 percent over last year! Some blues.

Features that will keep your sales growing

Consulting giant PricewaterhouseCoopers released a survey that identified the
site features that are most likely to capture sales. The research found that
with the exception of search capabilities and close-up product views, most
Website features are never used by the majority of Internet shoppers. The
search function is overwhelmingly the top feature used by consumers, with 77
percent saying they have used search functions while shopping.

Other site features such as wish-lists and personalization were found to be
less important to shoppers. As a side note, we found a study by the
International eRetail Association that listed wish-lists as a tool that works
well for building loyalty, so go easy on making assumptions based on Internet
studies.

The take-away on all of the recent information about Internet retailing is
that it continues to grow rapidly in spite of the gloom that fills the
business media. To paraphrase Mark Twain, the rumors of the death of retail
ecommerce have been greatly exagerated.
About the Author Rob Spiegel is the author of Net Strategy (Dearborn) and The Shoestring
Entrepreneur's Guide to the Best Home-Based Businesses (St. Martin's Press).
You can reach Rob at spiegelrob@aol.com.