January 2003
State Of The Industry
Marketing
Category
Customer Service
The Shopper

Interesting Internet Facts…2003

State Of The Industry

2002 e-commerce sales reached $74-$80 billion, a 39-50% jump from 2001 2
76% of consumers under the age of 35 shopped online, with 46% of those between the ages of 35 and 54 saying they shopped more online this year than last 6


2002 Holiday Season
It’s a Wrap …

2002 holiday online sales came in between $8-$10 billion, up to at least a 23% increase from 2001

28% of holiday purchases by internet users were spent online whereas just 4% were allotted to print catalogs



It is estimated that of the $800 the average Web shopper would spend on 2002 holiday purchases, $235 would be spend online
Women made the most online purchases and increased their share of buying from 60%, up from last holiday’s 56%
More than one-half (51%) of Americans said they were looking for lower prices this holiday season, while one-third (32%) are looking for more value, such as free shipping or bonus products with their purchases
The main reason 39% of consumers turned to the Internet was to avoid traffic & long lines at their local stores. For 33%, finding better bargains online was a major motivator while 21% cited a lack of sales tax
84% of consumers said they did either the same amount of online shopping or more compared to the 2001 holiday season
Despite record numbers of shoppers, the average purchase price dropped 10% for the holiday season, and 2% for the year, further indicating the impact of bargain hunting

Average Purchase Price
Q1 $119 $127 6%
Q2 $127 $126 -1%
Q3 $161 $145 -10%
Q4 $146 $137 -6%
Holiday* $145 $131 -10%
Full Year $137 $134 -2%
Source: BizRate. * Holiday period is measured from November 25-December 25, 2002. Holiday period is included in fourth quarter data.

Source: 1) BizRate.com; 2002 2) comScore Media Metrix; 2002 3 )Gartner G3; 2002 4) 2002 study conducted by Harris Interactive for Amazon.com 5) Goldman Sachs, Harris Interactive and Nielsen//NetRatings, 12/23/02 6) WSL Strategic Retail, January 2003

Books lead 2002 Holiday sales




Marketing


78%
of merchants surveyed stated e-mail promotions were the most successful in driving business followed by conditional free shipping (62%), search engine placement (37%) and offline/online coordinated promotions (25%)

More than 39% of orders were influenced by free or discounted shipping deals 2

Only 9% of orders took advantage of the offer, helping retailers reap the benefits of the interest generated without paying too much

Source: 1) Shop.or/BizRate; 2003 2) eMarketer; 2003


How Do I Reach You?

The Shop.org/Bizrate study found that e-mail (78%), free shipping (62%) and search engine placement (37%) were the top 3 most successful marketing/promotion efforts for online merchants over the holiday.

Especially valuable near the end of the holiday season were, Clearance pages (46%), Product promotions (44%) and featured sale item pages (42%)

59% of US consumers cited a guarantee that information would not be misused would spur them to share personal information, whereas 25% mentioned information otherwise unavailable


E-mail Benchmarks
Average number of marketing e-mails sent per month is 2.5
Delivery rates: 90-97%, house file names; 80% rental lists
Open rates: 25-50% 2
Click-through rates: 10-15%
Conversion rates: 2% of total delivery
$20,000 - $30,000 is the average cost of a single e-mail, including creative and transmission

Source: 1) DoubleClick 2) Experian 3) Babcock & Jenkins

A Little Privacy Please

In a recent Quris/Executive Summary Consulting Survey the freedom to opt-out easily, with an unsubscribe option in all e-mails, ranks number one in e-mail privacy

Loss of sales due to the lack of privacy & security will jump from $5.5 billion in 2001 to $24.5 billion in 2006 1


27% of online consumers say they abandoned their carts, 21% left the web to place an order offline and 7% of online purchases were made at an e-retailer or shopping portal other than the original shopping site due to concerns over privacy 1
75% of consumers prefer permission-based e-mail as a method of contact with online merchants 1

Source: 1) eMarketer; 2003


Am I getting through to you?

12% of B2C permission e-mails did not get through to the proper recipients in Q4 2002, up 12% from Q3 1

Source: 1) Assurance Systems, February 2003

Click Through Leaders...


Q3 2002 Q2 2002
Publisher-Consumer Audience 11.3% 9.1%
Consumer Products & Services 10.0% 9.4%
Travel 8.3% 8.4%
Business Products & Services 7;8% 7.5%
Retail & Catalog 6.9% 6.1%
Publisher-Business Audience 6.9% 5.2%



Do You Spam?

88% of US workers either “strongly” or “somewhat” favor congress strengthening the laws against spam

Search

How did you find me?

Online Shoppers using search engines to save time (54%), and money (52%), and those that compare prices are 22% more satisfied with their buying experience than those who didn’t 1

Of those using shopping engines to compare prices quickly, 24% are more likely to shop online in the next 2 months, 25% are more likely to shop online next holiday season & 26% are more likely to recommend online shopping to others 1

WebSideStory.com reports that as of February 2003, 64% of Internet users worldwide arrive at their desired site using direct navigation, compared to 35.6% using search functions

Why use a Search Engine?


How Far Will You go?

48% of users will go no further than the first page of search results before clicking on a listing


Category


Online sales in the Home & Garden area rose 65.6% ($2.1B) in 2002 with office furniture increasing 39.1% to $5.8 billion
Source: 1) ComScore Networks


Who’s the tops?

Top Shopping Categories During the 2002 Holiday Season, Ranked by Spending
(11/2 - 12/27)

Category Category Spending Online (Millions) Percent Growth (2001 vs 2002)
Books, Music, Video/DVD 3,113 40.0%
Apparel/Clothing 2,680 20.3%
Travel 1,971 5.8%
Consumer electronics 1,960 72.4%
Toys/Video games 1,843 72.5%

Source: Goldman Sachs, Harris Interactive, and Nielsen//NetRatings

Online Consumer Sales at U.S. Sites
(Excluding Auctions and Large Corporate Purchases)
Top 10 Non-Travel Product Categories
Quarterly Category Ranking Q3 2002 Spending (Millions) % Change vs. Year-Ago
% Change Vs. Prior Quarter
Computer Hardware $2,661 35% 17%
Office $1,442 47% -7%
Apparel & Accessories $1,312 22% 4%
Consumer Electronics $844 18% 18%
Books $538 10% -5%
Event Tickets $448 33% -33%
Home & Garden $388 16% -12%
Health & Beauty $259 21% -14%
Sport & Fitness $252 47% 12%
Movies & Video $202 34% 1%
Source: comScore Networks

Getting Personal Online!

26.6 million Internet users visited online personals sites in December 2002. Over half of these people were men (53.6%)


Almost half (48.1%) of the Internet users visited one of the top 3 sites



Customer Service


88% of customers expect a response to e-mail inquiries within 24 hours

Customer service e-mail inquiries will rise from 1.0 billion in 2001 to 3.3 billion in 2008

Online CRM technology spending will also grow from 2.3B in 2003 to 4.7B in 2008 accounting for 25% of the total 16.9B of overall CRM spending 1

According to Dieringer Research group, during 1Q02 64.3M Americans phoned call centers, compared with 40.5M who looked online for service & support during the same period. Web users averaged 10.5 inquiries per customer for the quarter, compared with only 4.4 inquiries per phone-based user.

Source: 1) Jupiter Research; 2003



The Shopper

Who’s Online?

67% of the US adult population is online somewhere – home, work, school, cyber café 1

27% of users have broadband, while 27% don’t know what kind of connection they have 1

Middle aged adults, those aged 35-49, accounted for 40.2 million Internet surfers in 2002 2

95% of those 55+ cited e-mail as a favorite activity, and 57% frequently send or receive e-greetings and online postcards 2

SeniorNet’s research indicates 76% of seniors were self taught Internet users, and almost half (46%) have been surfing for more than five years

Source: 1) Harris Poll; 2002 2) Jupiter Research; 2002


86% of at-work internet users have broadband access at their work place
38% of at work users are employed by large companies, while nearly 40% come from small businesses


Trivia


The top 10 best products of the last century;

10. Arpanet Network (the groundwork for the Internet)
9. Microwave Oven
8. Alto Personal Computer (prototype of today’s PCs)
7. Plain–Paper Copier
6. Black-and-White Television
5. Microprocessor
4. Mosaic (the first graphic web browser)
3. Polio Vaccine
2. Transistor Radio
1. Penicillin

Source: Drs. Gary Lynn and Richard Reilly of Stevens Institute of Technology


© 2003. the e-tailing group, inc.