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Holiday Web sales to grow
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September 5, 2000: 6:44 p.m. ET
More eager shoppers seen spurring 85% increase in Net purchases in 4Q 2000
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NEW YORK (CNNfn) - Consumers are expected to ring up $19 billion in online retail sales during the holiday season, as an influx of new Web users join veteran Web shoppers to pick up items such as consumer electronics and toys, an industry study said.
According to a study by Gartner Group, which is based in Stamford, Conn., worldwide Internet retailing sales in the fourth quarter of this year, the so-called holiday season, are expected to hit $19.53 billion, an 85 percent increase over last year.
 Robert Labatt, principal analyst for Gartner's e-Business Services, said that after last year's shopping season, when buyers spend some $10.53 billion online, shoppers are more experienced and comfortable with the process.
"What we are seeing is general acceptance of Internet shopping," he said.
Internet shopping is roughly in its fourth holiday season, and sales have grown sharply each year.
Each year, more people around the world gain access to the Web, in either their homes or offices, and many who previously had a link to the Web take the leap and buy a product.
"Part of it is that there are more people online and the people that are online are starting to shop more," Labatt said.
Industry experts say that as many as 40 percent more people have Internet access than last year. Web-audience measurement firm Media Metrix in August estimated that there are some 117 million individual global users, with about 80 million located in the United States.
"When people first get online, a small percentage of them actually shop in the first 6 to 12 months," Labatt added. "As they become more comfortable with using the Web and can search for the things that they are looking for, they...start to use it for shopping more."
At $10.7 billion, the receipts of North American shoppers represents more than half of the total, and nearly twice that of Europe, the second-biggest online-shopping region.
"Explosive Internet-access growth over the last two years, particularly in regions beyond North America, means that many Internet users are now familiar enough with the medium to make online purchases," said Astrid Van Dorst, senior analyst for Gartner.
Despite the dot.com shakeout, online spending continues to grow at a fast pace, industry analysts say. North America is expected to account for more than half of online holiday sales this year, followed by Europe, the Asia/Pacific region and Japan, the analysts have said.
Shoppers undaunted by dot.com shakeout
More people are becoming comfortable with shopping on the Web, but Web retailers are having a difficult time staying afloat chiefly because they sell products with little or no margin, analysts said.
Beleaguered online retailer Value America Inc. in August became the most recent casualty of the ongoing Internet shakeout. Several other dot.com retailers, such as Toysmart.com and Boo.com, have also fallen.
But as people become increasingly comfortable shopping online, more vendors pop up, bringing with them an increased supply of products. That, combined with better order-fulfillment technology, has helped boost Web sales, analysts said.
Most research houses expect online sales to grow sharply this year. Forrester Research, an e-business research firm in Cambridge, Mass., projects 11 million new households will be shopping online by the end of 2000, and sees 2000 sales to approach 39 billion.
Forrester analyst Seema Williams notes that the firm sees online shopping receipts tallying some $10 billion in the weeks between the Thanksgiving and New Year's holidays.
E-tailers getting prepared for big holiday season
Gartner Group said many consumers made their first online purchases last holiday season, overwhelming unprepared online retailers. But this year, both consumers and merchants are better prepared to handle the holiday crush, Gartner said.
 "In an effort to avoid stock outages and long delivery times, consumers are likely to shop earlier as they shop more in 2000," Labatt noted.
Many online retailers have spent the better part of the year ramping up their "back end" services, improving the flow of an order after the customer clicks the "buy" button.
Daniel Ries, managing director of C.E. Unterberg, Towbin, a New York-based investment bank specializing in technology, suggested that convenience and fulfillment - the efficiency with which a retailer takes an order and delivers the goods - will determine which shops benefit most from the sales spurt.
"What turns away [shoppers] are e-tailers saying they can't promise delivery or...a massive story about credit card fraud, but we haven't seen that," Reis said. "That should be a positive for the larger players of the market, like Amazon.com, who really have made their mark in customer service."
He suggests that the growth of books and music CD sales, an early favorite by online shoppers, will slow as shoppers look farther down their shopping lists for items to nab on the Web, perhaps favoring products that play music or video. 
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