Commentary

Just an Online Minute... Billions and Growing

Just how much are consumers spending online? Billions. The third quarter of 2003 produced online retail sales of $12.43 billion, a 24% increase over the same period in 2002 when $10.02 billion was spent, according to shopping search and comparison site BizRate.com. For the first nine months of this year, online sales totaled $37.16 billion, up by 24% from last year's $29.90 billion for the same period.

Actual orders grew by 47% to 101.34 million unique transactions in the third quarter. However, the average purchase amount has decreased by 15% to $123 in Q3 2003 compared to $145 in the same period last year.

The lower transaction amounts are being driven by price comparison shopping. In a BizRate.com Online Research Value Panel in September 2003, 78% of online buyers cited they were deal shopping because of tighter budgets. And, ninety-six percent said they comparison shop some, most or all of the time. Nearly half of online buyers (48%) are using aggregators such as comparison shopping sites, shopping portals, search engines and auction sites to start their shopping versus going directly to a merchant site (52%).

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Women are also driving most online transactions with September research highlighting that 62% of online buyers were females and only 38% are male.

Online shoppers are also expected to show more loyalty to price than store brand this holiday season as 45% of shoppers say they would not pay any price premium at all. The top categories in terms of sales volume were computer hardware ($3.09 billion), electronics ($1.97 billion), apparel ($1.28 billion) and entertainment ($1.24 billion). The strongest growth in Q3 came from Food & Wine (up 208%), Gifts & Flowers (up 198%), Office Supplies (up 182%) and Entertainment (up 181%) categories.

For Q4, the holiday quarter, BizRate.com forecasts $18.35 billion in online sales which is a 22% increase in spending over last year's $15.04 billion.

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