• November 1, 2001

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The combination of the economic slowdown and the Sept. 11 terrorist attacks will hold down individual consumer online spending this holiday shopping season, but according to a new forecast, an increase in the overall Internet population will translate into an increase in total e-commerce spending.

The holiday shopping forecast by Jupiter Media Metrix [NASDAQ:JMXI] predicts consumers will spend a record $11.9 billion online for retail and travel purchases this season - which it defines as November and December.

Spending for the 2001 season is expected to be 11 percent higher than the 2000 total of $10.8 billion. Jupiter Media Metrix analyst Rob Leathern said the 1999 holiday season brought in $7 billion, while the 1998 period totaled $3.1 billion.

"Our research shows average spending per consumer will be $258 this year, compared to $300 per buyer last year," said Leathern.

The overall Internet population has grown from 125 million a year ago to 142 million this year, and the number of online shoppers has jumped from 36 million to 46.2 million, he said.

"Putting those figures together, 33 percent of the online population will be shopping this holiday season, compared to 29 percent last year. There is a bigger group willing to give their credit card numbers and other information to online merchants," he added.

The Jupiter Media Metrix study found that only 14 percent of those who plan to purchase holiday gifts online in the next two months intend to spend less than 10 percent of their budget on e-commerce. That figure is down slightly from 18 percent last year and 61 percent in 1999.

According to Leathern, when people first try online shopping, they tend to purchase a single item as a sort of "test."

"That is how consumers build trust," he said. "They are dipping their toe into the water, as it were. Now, more people are comfortable with online shopping, and they are making big-ticket purchases and sending gifts to people. They are spending more of their budget online."

The study said the Sept. 11 attacks will have a "net zero impact" on online retailers this year. Due to travel fears, fewer Americans will fly, and airport security restrictions will limit the number of packages people will carry with them on planes. Because of those factors, Jupiter Media Metrix predicts more shoppers will turn to e-commerce and catalog sales.

The increase in the number of shoppers is balanced, however, by reduced holiday shopping budgets, the study added.

For the first time, the number of women shopping online will exceed the number of men, Jupiter Media Metrix said.

The study predicts women will total 53 percent of the online holiday buying population. The average spending per male will remain higher because men tend to make purchases in larger ticket categories such as consumer electronics and PCs, but women as a group will spend more than men.

Leathern said studies show women and men increasingly look at online shopping in the same way, as the reasons the two genders cite for shopping on the Web merge.

"With women, there is a slightly higher stated preference for avoiding crowds in malls, and a few more men than women say they shop online because they are looking for better prices, but overall, the differences between the genders are small," he said.

Jupiter Media Metrix expects many of the same categories that were popular last year with online shoppers to be big again this holiday season, including books, clothing and shoes, music, toys, and videos.

The one category that is expected to draw fewer shoppers is computers and accessories. While 24 percent of last year's shoppers said they would purchase one or more computer-related items during the online holiday shopping season, only 18 percent said they will this year.

Leathern said part of this decrease can be explained by the fact that the overall Internet population has increased, and no longer is the exclusive domain of techies.

"The Internet population still is a more affluent group than the general population, but it is becoming more reflective of the overall population," he said. "The net worth of online households is 25 percent higher than the overall average, but it used to be much higher."

As people become more at ease with online shopping, consumers will be buying apparel online in larger numbers than in years past, Leathern said.

Jupiter Media Metrix: www.jmm.com .

--Reported By Michael Bartlett, Newsbytes.com, http://www.newsbytes.com .

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