Online Shoppers To Spend $15 Billion More In 2001

Welcome Guest. | Log In| Register | Membership Benefits

February 26, 2001 (2:43 PM EST)

Online Shoppers To Spend $15 Billion More In 2001

By Jill Morneau,

Despite the ongoing e-commerce shakeout, which has claimed companies selling everything from pet supplies to furniture, analysts say online retailing is growing.

Two analysts from Boston Consulting Group said during a conference call Monday that e-commerce is still alive, but the guidelines for doing business have changed. Now, customer satisfaction cannot be stressed enough.

"Online retailing is not dead," said Michael Silverstein, senior vice president and global leader of BCG's Consumer Practice. "We're at a point in time of rapid growth, where to be successful requires new levels of capability."

In fact, during 2001 online shoppers are expected to spend in excess of $50 billion, and the online retail market will reach $170 billion by 2005, said Peter Stanger, vice president and leader of BCG's business-to-consumer topic area in North America. Shoppers spent $35 billion online in 2000.

And the market is growing: 78 percent of 123 million Internet users said they shopped online in 2000, up from 67 percent in 1999, said Stanger.

Online retailers have to keep up with consumers' demands, which are constantly changing and evolving. "Consumers are increasingly technologically savvy. They are impatient and demanding. They have many alternatives [when shopping.] Online is a very convenient option," said Silverstein.

Silverstein stressed the importance of customer satisfaction, since a happy customer is bound to be a loyal customer. Satisfied customers also are willing to recommend the site to others, creating a larger customer base.

Unsatisfied customers will not return to the website to try another shopping trip, Stanger said. "People are much more discerning about which retailers they want to transact with," Stanger said.

According to BCG, online consumers in the least satisfied category spent $428 in the 12 months of 2000, while satisfied respondents spent $673 online, engaging in nearly 50 percent more transactions. Satisfied customers engaged in 9.4 transactions while the unsatisfied customers had an average of 6.5 transactions over the 12 months.

BCG gathered its data by speaking to just under 3,000 Internet shoppers during the fourth quarter of 2000.