Vendors and researchers have detected various new trends at play in online retail shopping this holiday season, such as shoppers' increased use of search engines and comparison shopping services to make better informed buying decisions. Not all trends are encouraging, however, such as a disconcertingly high percentage of shoppers willing to buy from spammers.
What no one seems to dispute is that online retail shopping has grown significantly this holiday season over last year's period, a fact verified by various market researchers. For example, comScore Networks expects non-travel retail spending to grow by between 23 percent and 26 percent to between $15.1 billion and $15.5 billion in November and December of this year, compared with last year.
Last week in particular (December 13 through December 17), online retail sales shot up 49 percent compared with the corresponding period last year, says Dan Hess, senior vice president at comScore. He attributed the week's robust growth to two factors: shorter shipping times and improved options to buy online and pick up the merchandise at a bricks-and-mortar store.
The shorter shipping times prompted buyers to shop more last week with the confidence that the products would arrive in time for the holidays, Hess says. "There has been extensive work done behind the scenes by retailers and shippers to shave days off of shipping timelines and effectively communicate them to consumers," he says. "The days of online retailers not meeting their product-delivery commitments are becoming a distant memory."
Meanwhile, many major online retailers have improved their options to buy online and have the buyer pick up the products at a local store, which eliminates shipping costs and shipping wait time, Hess says. "This is not a new option this year, but it has been perfected by more retailers than ever before."
In what must sound like music to online retailers' ears, online shoppers for the first time planned to spend more of their holiday shopping budget online (53 percent) than offline, according to an America Online survey conducted in August and September. The study also found that shoppers planned to spend on average 6.5 percent more online this holiday season than last year, although they cut their overall budget for both offline and online holiday purchases by 3.6 percent, compared with last year.
Searching for Bargains
While spending is undeniably up, so is shoppers' willingness to take advantage of search engines and comparison shopping sites, a trend identified by several organizations.
For example, online measurement company Hitwise found that during the week ending December 11, search engines contributed a significant number of referrals to shopping and classified sites, led by Google with 4.26 percent of referrals and followed by Yahoo (2.24 percent) and Microsoft's MSN (0.54 percent.)
Moreover, the AOL survey found that 27 percent of online shoppers described themselves as comparison shoppers or researchers, up from 23 percent last year, and that 48 percent are using search tools, up from 42 percent.
And the more time shoppers spend researching buying decisions online, the less fixated they are on price and the more value they place on other factors, such as companies' reputations and brands, according to a year-long study conducted by the Massachusetts Institute of Technology's Sloan School of Management and announced this month.
"A common assumption has been that the more time people spend searching, the more price sensitive they are," says Erik Brynjolfsson, director of the Center for eBusiness at the MIT Sloan School of Management, in a statement. "But there's more to a product than its price. We found that consumers weren't searching just for lower prices, but for other characteristics."
While many online shoppers are getting savvier, others are still too naive or ignorant of online dangers and engaging in risky and questionable buying practices. For example, a surprising 21 percent of respondents to a survey conducted in November by the Business Software Alliance and the Council of Better Business Bureaus admitted to having purchased software from a spammer. The same survey found that 22 percent of respondents bought apparel and jewelry from a spammer.
"Many consumers will find their holiday shopping experience is ruined as a result of buying or trying to buy products through spam," says Bob Kruger, vice president of enforcement at the BSA, an organization that represents the software industry. "There are a lot of cyber-grinches out there who are only too happy to take consumers' money and spoil their holiday shopping season."
For example, shoppers may never receive the products, become victims of identity theft, or have their PCs invaded by spyware or infected with viruses, he says. In the case of software specifically, the BSA has found that most software offered via spam is pirated, Kruger says.
That so many people are willing to shop from spammers shocked the BSA, Kruger says. "This demonstrates the need to further educate consumers on the danger of buying in response to spam," he says.
Still, even online shoppers who consider themselves savvy and informed need to be aware that scams, fraud, and bad service abound on the Internet, particularly during the holidays, according to Consumer Reports Webwatch, a project of Consumers Union, the publisher of the Consumer Reports magazine.
The group offers tips for avoiding falling prey to scams, fraud schemes and inept service online at its Web site, ConsumerWebWatch.com, including how to deal with retailers that don't deliver on time and how to determine whether an online charity is legitimate.
Unfortunately, it seems that a popular online fraud scheme called phishing is keeping many potential holiday shoppers away from online stores. A survey commissioned by e-mail security vendor MailFrontier and conducted in October found that 29 percent of respondents decided not to shop online this holiday season out of concern over phishing schemes, in which scammers trick individuals into revealing sensitive personal and financial information by tricking them into visiting what look like legitimate Web sites.