E-Commerce Grows, Despite Slumping Economy

The number of Americans buying online will double from 64.1 million as of 2000 to 130 million by 2005, according to a report by research firm eMarketer.

Fear of credit card number theft still remains a concern, however.

The report, which aggregates and analyzes data from more than 100 research organizations, has varying e-commerce estimates for the year 2001 in the United States, with numbers ranging from $37.1 billion by Direct Marketing Association to $117 billion by Keenan Vision, according to eMarketer.

EMarketer's own estimate is that U.S. business-to-consumer revenues, which totaled $38.3 billion in 2000, will quadruple to $156 billion by 2005.

The Internet, according to eMarketer, is being accepted and is evolving as a key distribution channel for traditional merchants. Lines are blurring between traditional business operations and Internet pure-plays, the company says.

Buyers Cautious

Other highlights of eMarketer's report include the following:

• Visa International places online credit card fraud rates at between 25 cents to 28 cents per every $100 charged, significantly higher than the 7 cents for all transactions.
  
  
• Jupiter Media Metrix finds consumers are "overwhelmingly" fearful about theft of credit card data online. Nearly 81 percent of U.S. consumers are afraid their number will be intercepted online.
  
  
• The number of U.S. Internet users, noted as 116.5 million in 2000, will jump to 184.1 million by 2005.
  
  
• Alexa Research reports that 33 sites in the top 50 e-commerce sites have multichannel operations while only 17 are pure dot-coms.
  
  
• Giga Information Group expects that click-and-mortar companies will dominate Internet sales again in 2001, as they did in 2000.
  
  

Unhappy Returns

What's more, Web shoppers say many online retailers fail to deliver quality service, according to a recent survey by Consumers International.

Researchers at 15 consumer organizations in 14 countries placed a total of 340 orders with online stores around the world. They found that 18 percent of the online shops didn't give the total cost of the order, 34 percent didn't detail the delivery area, 39 percent of the orders didn't arrive within the time quoted, and 6 percent didn't turn up at all.

After delivery the goods were returned. Only 33 percent of the products came with return instructions. In 17 percent of the cases it took over 30 days for a refund to be credited and in 9 percent the researchers are still waiting for credit.

Improvements Noted

U.S.-based online retailers outperform their counterparts in Europe, the Consumers International study shows. Almost three quarters of the purchases made in the U.S. arrived on time, compared with 60 percent in Europe. Only 32 percent of the goods ordered in Europe came with return information, compared with 55 percent in the U.S. In addition, U.S. sites were better at showing if a product was in stock.

Online retailers have improved their service since 1999, when Consumers International did its last study, the organization says. The information provided is better and more online stores give a target delivery time. Data for this year's study was collected from about November 2000 until March 2001.

Concluding that business still has some way to go in both fulfillment of orders and improving information, Consumers International, a federation of 263 consumer organizations worldwide, is calling for governments to strengthen legislation and guidelines for consumer protection. Web retailers that fail to comply should be "named and shamed," and businesses and consumers should be educated, the organization says.

Joris Evers of the IDG News Service contributed to this report.