Holiday Spending Numbers Come in Below Projections

US consumers spent $10.8 billion online during the 2000 holiday season — a 54 percent increase over the $7 billion spent last year — despite concerns of a poor holiday season, according to Jupiter Research.

Online Sales by Category November and December (millions of dollars)
Travel reservations	$2,551
Computer hardware/ Peripherals	$1,216
Apparel	$1,144
Auctions	$937
Toys	$839
Consumer electronics	$810
Books	$774
Financial services	$539
Music	$443
Flowers/Greetings/ Gift items	$420
Computer software	$359
Movies/Videos/DVDs	$348
Office and school supplies	$291
Grocery items	$240
Beauty	$233
Sporting goods	$222
Video games	$198
Shoes	$175
Prescription drugs	$141
Pet supplies	$113
Other categories	$207
Total Projection	$12,200
Source: The NPD Group, Inc.

The Jupiter Post-Holiday 2000 Consumer Survey, which asked more than 2000 online consumers about their holiday purchasing patterns between November and December 2000, reveals that during the holiday season approximately 36 million consumers purchased online and spent an average of $304 worth of merchandise.

“Online retailers who invested in improving back-end operations this year were winners in satisfying holiday online shoppers,” said Heather Dougherty, analyst at Jupiter Research. “However, moving forward, the challenge is for retailers to retain and expand customer relationships, and continue to increase online sales to justify the operations investments well into 2001.”

Additional findings from the survey include:

• Amid the demise of many online-only retailers, online holiday buyers continued to purchase from Internet-only retailers. Online buyers balanced their purchasing between Internet-only retailers (35 percent) and online retailers that also have a physical store or catalog (37 percent).
• Despite increasing sophistication and demands by online consumers, overall satisfaction with online holiday shopping remained unchanged from last year. Ninety percent of online holiday buyers cited being “very satisfied or satisfied with buying merchandise online during the 2000 holiday season,” compared to 89 percent last season.
• The 2000 online holiday season marked the emergence of the mass-market consumer. According to Jupiter Research, while online purchases by the higher-income, affluent buyers have dominated in the past, purchases by lower and middle-income online users have increased.
• The $10.8 billion spent online this holiday season — within 7 percent of Jupiter’s original holiday prediction from September — marks a 126 percent increase over the $3.1 billion spent during the 1998 holiday season.

According to The NPD Group, Inc., online holiday revenues reached an all-time high of $12.2 billion. This is also slightly lower than NPD’s forecast, but online sales still nearly doubled during November and December, compared to the same period last year.

Because of high price points, online travel reservations accounted for the largest portion of the online revenue, capturing 21 percent of total sales, NPD found. Travel, computer hardware, apparel, toys, consumer electronics, and books comprised 60 percent of online revenues during the holidays. Auctions and financial services made up another 12 percent.

“After all of the worry and hype, online sales just about lived up to expectations,” said Pamela Smith, VP of NPD Online Research. “The stage is set for consumers to move more of their purchases online. But just like any other retail channel, e-tailers now need to understand what is important to their buyers and learn how to profitably deliver on these needs.”

NPD’s e-Commerce 2001 Consumers Speak Out e-Visory report is based on a survey conducted in January 2001 among 2,439 members of NPD’s Online Panel.