SURF’S UP: THE NET BOOM
Byline: Valerie Seckler
The Internet’s user population — as well as its cyber-shoppers — are moving targets, a rapidly growing group of increasingly diverse people who are tough to track.
But that did not prevent a panel of cyber-experts from offering updated estimates, Thursday, on what those groups will look like at year’s end, or from detailing how those consumers — and various Web merchants — have changed the face of e-commerce during 1999.
The Net observers offered those assessments during a 1999 Outlook Seminar called “Apparel.click: The E-Business Imperative,” that was held by the American Apparel Manufacturers Association at the Grand Hyatt Hotel in Manhattan.
“We expect a larger proportion of Internet users will eventually buy apparel online than the 4 percent who have done so this year, because so many people buy it in the real world,” predicted Ken Cassar, a digital commerce analyst at Jupiter Communications, who specializes in apparel, among other areas. “But we do not expect a significant channel shift to occur until 2003.”
In contrast, 35 percent of online shoppers have bought computer software on the Web this year, while 14 percent have used the channel to buy books.
U.S. consumer purchases of apparel online will come to $804 million by the end of 1999, Cassar estimated, with Gap and Lands’ End “dominating” the sector, against sales of $441 million in 1998.
He projected that women will account for 53 percent of apparel purchasing online this year and 40 percent of overall consumer spending on the Web.
More broadly, Jupiter is forecasting that the number of U.S. consumers using the Net will come to 100 million people by Dec. 31, or approximately 37 percent of the country’s population, with the number of cyber-shoppers climbing to 29 million — a 54-percent surge over the 18.8 million individuals who shopped online in 1998.
Jupiter, an Internet consultancy based in Silicon Alley, now expects online sales to American consumers, excluding transactions conducted on auction sites, to tally $15 billion this year, with $6 billion, or 40 percent of it, generated this holiday.
That overall volume would mark meteoric growth of 92 percent over the $7.8 billion consumers spent in cyberspace in 1998, as $3.1 billion of it came during that holiday period.
Even given that dramatic growth outlook, it is worth noting that Jupiter has sometimes erred on the side of conservatism in its projections. Ernst & Young, by comparison, has estimated that consumers’ holiday e-commerce alone will range between $12 billion and $15 billion, and Forrester Research has staked out the middle ground, eyeing sales of about $10 billion this season.
At least three groups of cyber-shoppers have emerged, this year, Cassar noted.
They are the “newbies,” who have been online for less than one year and now account for roughly 30 percent of Net users; “intermediate” users, who have been online for between one and two years and amount to about 13 percent of the cyber-population, and “veterans,” or those online for more than two years, who amount to around 57 percent of users.
“The point is that it is hard to [broadly] define the online user,” Cassar said. “We expect the newbies and intermediate users to grow at the most rapid rates during the next few years.”
Cassar was joined on the panel by Thomas Lesica, chief information officer at J. Crew, and Lara Hogdson, vice president of operations strategy for the retail and consumer goods practice at iXL.com, an Atlanta-based Internet consulting firm.
According to Hogdson, roughly 3 percent of retail sales in the U.S. will have been transacted online by yearend, with people ages 36 to 44 accounting for 28 percent of the purchasing, and 45-to-64-year-olds having done 27 percent.
Spurring a broader swath of people to purchase online this year than the men in their 20s who had previously dominated Web buying, Hogdson said, were moves made by various e-commerce players to give Net users more control over online shopping. They did this, she explained, by offering better-edited assortments; live customer service representatives via e-mail and telephone, and a growing willingness among click-and-mortar players to enable cyber-buyers to return goods to their traditional stores, among other enhancements.
“The Internet’s biggest impact on shopping, this year,” Hogdson said, “has been to break up the purchasing process across multiple channels. People are researching products online; trying on items or looking at them at the stores, and then purchasing them in any number of venues.”
Further, an increasing number of Web sites have sought to build infrastructures that leverage online operations by, for example, expanding relationship marketing or personalizing the shopping experience, Hogdson recounted. That trend represents a shift from last year’s focus on redesigning Web sites and improving links between front-end aspects such as sales, and back-end operations, like fulfillment.
“I think there is more of a need, now, to build a more consistent brand marketing effort and shopping experience across multiple channels,” J. Crew’s Lesica stated.
“Another big issue that has emerged this year is the need to assess the value and privacy of the customer database,” Lesica continued. “How the government does — or doesn’t — allow the sharing of information about a Web site’s customers will be an issue of growing importance.”
Web sites winning kudos from the panel for shopping innovations this year included:
Landsend.com, for pioneering the use of My Virtual Model, which enables users to develop a model, created from their own measurements, on which they can drag-and-click various items.
Gap.com, whose shoppers can use a fit-comparison tool to see how an item they’ve never worn compares with one they’ve bought online, by dragging-and-clicking the unfamiliar item, say, a pair of bottoms, onto a digital image of a comparable one they’ve worn in the past, like chinos.
Bluefly.com, for personalizing the shopping experience, allowing shoppers to choose what goods they’d like to see, according to brand, size or price, for example, on subsequent visits.
Boo.com. “They’re taking some huge risks, and we don’t know how they’ll play out,” Cassar said. “But they are creating a vendor-friendly environment by spending a tremendous amount on digital photography; not discounting product; not charging shipping or handling fees.”
“You probably need a 64K modem rather than a 56K modem [as Boo has advised] to avoid getting frustrated with the site,” Cassar advised. “We don’t expect significant sales volume from Boo for 1999, or 2000. However, if you’re a fashion vendor who’s considering selling a pure Net play, particularly one with an urban audience, you should look at them.”