Internet Confidence Index Dips Slightly for Q1 2002

Yahoo! Inc. and ACNielsen today announced the results of the fourth wave of the Yahoo!/ACNielsen Internet Confidence Index, a quarterly study designed to measure confidence levels in Internet products and services.

Overall, the Index dropped four points during the first quarter to 111, compared to the fourth quarter of 2001. While the slight decline was driven primarily by heavy Internet users who are less confident with online order fulfillment versus the prior study during the past holiday season, the Index is still higher than both the second and third quarter levels in 2001.

The Index also indicates that more people intend to shop online during the second quarter of 2002. However, they are projected to spend $13.8 billion in the second quarter, slightly less than had been projected for the first quarter.

Travyn Rhall, managing director at ACNielsen International Research, said, “It is normal for an Index as broad and far reaching as this one to experience its first small decline. The Internet Confidence Index is still well above the launch baseline of 100, which indicates that overall Internet confidence of the average consumer is still relatively high. This is further evidenced by more people intending to shop online.”

This wave of the Index also examined the Internet’s role in helping people manage their taxes and other areas of personal finance. The study found that more than 40% of users manage some aspect of their personal finances online, while 26% intend to use the Web for tax research this year. These results provide evidence of a strong consumer demand for online personal financial services, and suggest a potential opportunity for e-commerce players in this space.

Overall Confidence Index Results

The Internet Confidence Index’s dip during this wave of the study was prompted in part by heavy Internet users who expressed less confidence with the fulfillment process for online orders, relating specifically to customer service and the delivery of goods during the holiday season. Additionally, among all users, there was an increased concern over the security of credit card information and level of trust with how personal information is being used. Nevertheless, consumers continue to acknowledge the convenience, availability of price comparisons and access to information offered by the Internet, especially among light Internet users.

“What we are seeing here is the progression and growth of what consumers expect from the Internet, especially during the holiday shopping period,” said Jennifer Dulski, director of commerce marketing at Yahoo!. “The more that people use the Internet to transact, the greater the possibility there is to have a negative experience at one point or another. This points to the need for businesses to address consumer concerns regarding delivery and customer service, as well as provide greater reassurance to shoppers about their Web site’s security in order to provide better experiences for their customers.”

Consumers Embrace Online Personal Finance

The study reinforced the fact that the Internet is becoming a greater resource for consumers as they prepare their tax returns. This year, 15% of Internet users surveyed will use the Internet to file their taxes online, predominately because of the convenience and time savings the Internet affords. Users also report that tracking investments and paying bills are currently the two most commonly used online financial services, just ahead of budgeting and planning tools.