Online holiday retail sales are expected to soar 21 percent over last year, to $17 billion, according to a report released today by Jupiter Research, a division of Jupitermedia.
The report, "Holiday 2003: Online Pushes Limits of Last Minute Shopping," states nearly 40 percent of online users plan to do some or all of their holiday shopping online, an increase of 18 percent over last year. The biggest growth groups this year, according to Patti Freeman Evans, retail analyst at Jupiter Research, will be from people over 50 and teens.
Yet, she maintains these groups may not necessarily spend the most. Only 30 percent of consumers earning $35,000 or less plan to purchase products online this holiday season, whereas 51 percent of those that earn between $60,000 and $74,000 will purchase products online this winter. Incidentally, only 41 percent of those making $75,000 to $100,000, and 50 percent of those making $100,000 or more plans to make online holiday purchases this year. "It's really the upper-income people that plan to do their shopping online, which is where the new adopters have traditionally been," Freeman Evans says.
The reasons for the upsurge, she says, are consumer confidence in credit card security and improved comfort levels with online purchasing. This year, only 36 percent of consumers cited fear of credit card security versus 47 percent last year.
Half of consumers say they can find the products they are looking for online more easily than in stores, and they believe they can obtain hard-to-locate products online far easier than in stores. Jupiter Research attributes these shifts in consumer attitude, and the 21 percent surge in holiday spending this year, to the influx of new buyers using the online channel.
Freeman Evans adds that fulfillment applications and operations have improved substantially over the past year. As a result, the report states that 41 percent of online retailers surveyed will offer extended cutoff dates to encourage last minute purchases. To guarantee delivery by December 25th last year, only 17 percent of retailers enabled consumers to purchase products as late as December 23, as compared to 22 percent this year. "It used to take them a day to turn an order around. Now, they can do that in minutes," she says.
Although 46 percent of consumers stated they will shop more than four weeks before the holiday, Jupiter Research expects the convenience of online shopping will encourage procrastination purchasing, as consumers buy products during the tail end of the buying season. This means customer service centers will have to prepare accordingly. "Interestingly, most are using email in a similar way they used last year. Fewer are using toll-free telephone support and more are using online self-service. They've also implemented cobrowsing and page pushing capabilities, where a vendor can push the page to a customer which can be done in an online chat or over the phone," Freeman Evans says.
She adds that typically, retailers hire more temporary and seasonal staff. More than half the retailers surveyed will rely on new and seasonal staff to accommodate the increased demand. This can be challenging, Freeman Evans says, as temporary agents' productivity is lower than veteran customer service representatives. For this reason Freeman Evans recommends customer organizations use third-party outsourcers for call overflow, because of their expertise.