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Online Shopping Gains Momentum in 1997, Study Says

11.2 million shoppers went online in 1997, up from 6.6 million the previous year, spending a total of $3.3 billion.

By Cheri Paquet, PCWorld   

The number of online shoppers rose to 11.2 million in 1997, up from 6.6 million the previous year, according to Stuart Gibbel, an Organic spokesman. Of these online shoppers, 76 percent made multiple purchases in 1997 for a total of $3.3 billion in consumer spending, he said.

Those numbers will continue to climb in 1998, with a predicted 15.5 million purchasers expected to spend $6.2 billion, Gibbel said.

Internet users are going online not only to shop, but also to browse.

E-commerce makes information systems managers%squot lives easier and helps organize and ensure product compatibility, according to Cimeron Dunlap, an Organic spokeswoman. %dquotSince most companies are currently electronically based, it makes sense for IS managers to make product comparisons and purchase routers, computer software, and so forth online,%dquot she explained.

A significant trend toward generating online sales is taking hold in IS, particularly in the case of Web managers, Dunlap said, and software sales reflect this trend. Software is the number one online seller, capturing 38 percent of all e-commerce, with books following at 28 percent and PC hardware at 20 percent.

However, certain issues--including security, privacy, and the technicalities of running an e-commerce site--continue to challenge IS managers, said Dunlap.

Despite the technical obstacles, setting up shop online may prove a wise investment, since consumer online spending is predicted to rise to $34 billion by 2002, with 92 million adults making online purchases.

The Internet is also driving up traditionally generated revenues, according to the study.

Of the 29.5 million Internet users researching information online in 1997, 15.8 million users--approximately half--completed their shopping by telephone, fax, or mail order, totaling $4.2 billion in offline sales, Organic said.

Online shoppers may see some benefits in making their purchases online. Of the survey%squots respondents, 23 percent felt that shopping online decreased their total shopping time.

Online shopping is becoming a new way of doing business, said Organic%squots Dunlap. Ease, convenience of use, and in some instances better customer service are encouraging more people to make it part of their lives.

In some industries--for example, travel--companies are providing users with added incentives such as price reductions in order to encourage them to go online, she said. This saves on customer service salaries and overhead costs, and allows users to seek exactly the information they want.

The industries that saw a rise in online sales during 1997 were general gifts at 18 percent, automotive items at 15 percent, apparel at 14 percent, and food purchases at 4 percent.

The diminishing fear of using credit cards online may be a contributing factor to the rise in online sales. Two out of three online shoppers used their credit cards online to complete transactions and more than 7.3 million users made credit card purchases online in 1997, according to Organic.

The myth that consumers are afraid or wary of buying online is being dispelled, Dunlap said. There is a greater risk of credit card fraud when you hand personal information to a restaurant waiter than when you make an online purchase, which involves secured documents, she said.

The survey results, published in %dquotThe Consumer Online Commerce Report,%dquot use data collected from the Cyber Dialogue American Internet User Survey, a randomly conducted telephone survey of 500 U.S. Internet users and 500 nonusers.