Consumers with access to the Internet are turning their backs on shopping the traditional way.
In fact, almost 40 percent of respondents to a new study say they frequent real-world stores or malls less often now that they can easily purchase a growing variety of items online.
“These results are significant to retailers, since Americans who use the Internet hold 60 percent of the buying power of the total U.S. population,” says Rudy Nadilo, chief executive officer of Greenfield Online Inc., [www.greenfieldcentral.com], the Westport, Conn.-based market research firm that conducted the study.
Consumers who participated in the study cited the ease of comparing prices as the number one benefit of online shopping. Respondents to the Greenfield survey also liked the ability to buy quickly and easily when online.
What keeps some consumers loyal to the local store? The ability to touch, see, try out and instantly take home the products they want, the survey says.
The Greenfield findings are backed by yet another survey from Odyssey Ltd., a market research firm based in San Francisco. The Odyssey study notes that the total number of online purchases by U.S. households exceeded 56 million in the last six months, more than four times the amount measured a year ago.
“The desire for convenience and choice is attracting consumers to electronic commerce in unprecedented numbers,” says Nick Donatiello, Odyssey president and CEO. “It’s also clear that those who try e-commerce from home like it — they keep coming back for more.”
Which brick and mortar stores stand to lose the most business? Book stores. The study by Greenfield and a past study by Ernst & Young confirm that books remain the biggest online success story. According to Greenfield, online book retailers are poised to surpass mall bookstores. Consumers said that they were just as likely to purchase books online (49 percent) as at the mall (51 percent). According to Ernst & Young, books are the most popular item purchased online.
Consumer acceptance of the Internet as a viable shopping medium has not been lost on traditional retailers. Traditional retailers everywhere are scrambling to build effective virtual stores and establish a presence on the Web, according to the Ernst & Young study. In 1998, study participants who said their companies were either selling or planning on selling through the Web skyrocketed to 76 percent from 36 percent. During the same period, retailers selling on the Web jumped to 39 percent from 12 percent.
“The Web has become a valid purchasing channel for consumers,” says Stephanie Shern, vice chairperson at Ernst & Young. “Retailers clearly recognize its popularity among consumer audiences and are now staking an online claim.”
Internet sales will represent nine percent of total retail revenue by fiscal year 2001, says Ernst & Young. In addition to capitalizing on the monetary benefits of e-commerce, retailers are using the Web to attract new customers, penetrate new markets, promote the company’s brand and improve customer retention.
