Online consumer spending still growing rapidly

[July 26th 2000]

U.S. consumers spent an estimated $8.28 billion online in the second quarter of 2000, up from $7.04 billion in the first quarter, according to preliminary findings by Harris Interactive and U.S. Bancorp Piper Jaffray.

This surge was led by nearly 20 percent quarterly growth in the Travel Services sector and a 13 percent increase in online Auctions. Both in terms of awareness among Internet users and share of online purchasers, Amazon.com has the strongest e-Commerce brand, followed closely by eBay. The survey, part of the Harris Interactive e.commercePulse study, was conducted online with 97,633 adult online users in April, May and June.

"E-Commerce is not dead," said Greg Konezny, Vice President and Senior e-Consumer Research Analyst for U.S. Bancorp Piper Jaffray. "We believe the market adjustment in April was a wake-up call to both investors and online retailers, who were put on notice that stricter expectations were being exerted on their performance. But it didn't dissuade consumers from continuing to use the Internet to buy goods and services. The Internet as a means of commerce is here to stay."

The study also found that consumers spent an additional estimated $15 billion by phone and in stores as a result of shopping online. This ratio of $1.74 spent offline for every dollar spent online is down from $1.95 for every dollar in Q1 and $2.34 for every dollar in Q4 1999.

"More and more consumers are completing their transactions online," noted Lori Iventosch-James, Director of E.Commerce Research for Harris Interactive. "This trend illustrates a growing comfort among consumers with online purchasing and provides further evidence of the sustainability of the Internet for business-to-consumer e-Commerce."

Leading Brands and Categories

Despite its rumoured financial woes, Amazon.com continues to demonstrate the power of its brand. More people associate Amazon with e-Commerce than any other site and more consumers bought from Amazon than any other e-Commerce site. When asked to name the first site that came to mind when thinking about sites that sell products or services over the Internet, nearly one in four Internet users (24.1 percent) said Amazon. In addition, among consumers who made an online purchase, 18.7 percent made a purchase from Amazon. eBay's brand was a strong second in terms of both mindshare--it was mentioned first by 16.1 percent of Internet users--and purchaser share (15.8 percent of online buyers bought from eBay). Yahoo had the third-highest mindshare (mentioned first by 4.9 percent of Internet users); priceline.com was fourth (2.7 percent). No other site was mentioned by more than 2 percent of Internet users. Barnesandnoble.com attracted the third greatest share of online purchasers, 6 percent, followed by three music/video sites: BMG.com (3.9 percent); BMG's latest purchase, CDNow.com (3.3 percent); and ColumbiaHouse.com (3.1 percent).

The leading categories in the second quarter were Travel Services, where sales topped $2.4 billion, Computer Hardware/Peripherals at $841 million and Auctions, which approached three-quarters of a billion dollars. The markets showing the strongest online growth were the smaller sectors of Fitness/Sports Equipment, up 56 percent to $107 million, and Home/Garden, up 38 percent to $114 million. Sales in the online Clothing/Apparel market rose 11 percent to $684 million. The average number of online buyers in a given month increased most in the Travel Services, Clothing/Apparel and Home/Garden sectors.

[Full results tables]

Links
Harris Interactive		http://www.harrisinteractive.com