Ecommerce

Changing Internet Population Demographics

The profile of the typical Internet user is changing rapidly. Significant recent changes include:

The Internet, especially the World Wide Web, is now a consumer medium. A high level of technical skill is no longer required to use the Net effectively.

Low cost Net appliances, like WebTV, are bringing the Internet to homes that don't even own computers; community centers, libraries, and coffee houses offer free or low cost access to all comers.

Using the Internet to research a major purchase is becoming commonplace. Intelligent agents like Active Buyer's Guide aid comparison-shopping.

Over 50% of home users use a broadband connection to connect to the Internet.

Wireless access to the Internet is popular in Japan and Europe and is beginning to catch on in the United States.

Boundless Enthusiasm

A visit to the ClickZ Stats Toolbox reveals that market research firms are producing surveys of Internet use at a dizzying rate. Even more dizzying are the prognostications based on these statistics.

Jupiter reported that electronic commerce transactions in 1996 amounted to only $12M, but by 2002 BizRate.com was projecting almost $48 billion in retail online sales—a year over year growth rate of 32%. Almost $8 billion was spent online during the 2002 holiday season—after 9/11, in the midst of a recession, amid rumors of war. eCommerce has grown up.

Although eCommerce accounts for only a small percentage of all retail sales, it's growing. Perhaps not at 32% a year but the 17% annual growth rate that Jupiter suggests seems to be in line with the following Census Bureau statistics.

U.S. Retail Sales

Based on: "E-commerce Penetration on the Rise," ClickZ

Jupiter Research expects U.S. online retail sales to reach $65 billion in 2004 and reach $117 billion in 2008. Jupiter expects the fastest growth to be in the home and personal care category. Once the first time online purchase is made successfully, additional purchases are likely to follow. The Media Audit found that 41% of internet users made one or more purchases online a year, and 23% made 5 or more online purchases.

Online Research Influences Offline Sales

The impact of ecommerce is greater than any of these statistics indicates:

"However, if one considers only the dollar value of online transactions, the importance of e-commerce to the economy is underestimated. Even when the transaction does not take place online, the terms and conditions of the commercial interaction are altered by the availability of e-commerce options. A car buyer can go to the nearest dealership armed with detailed research obtained online. The local bookstore must now consider the pricing and service policies of online competitors."

Source: US Department of Commerce, Digital Economy 2003

The 2004 American Interactive Consumer Survey by The Dieringer Research Group found that online product research conducted by consumers the past year was responsible for $180.7 billion in offline spending. Internet-influenced offline sales grew 31% last year compared to a 14% increase for direct online sales. In addition consumers use the Internet to help them make decisions about banking, insurance, and other financial products.

Digital Divide?

The Digital Divide is the catchy term for the gap in opportunities experienced by those with limited access to the Internet.

"The Internet is becoming an increasingly vital tool in our information society. More Americans are going online to conduct such day-to-day activities as education, business transactions, personal correspondence, research and information gathering, and job searches. Each year, being digitally connected becomes ever more critical to economic and educational advancement and community participation. Now that a large number of Americans regularly use the Internet to conduct daily activities, people who lack access to these tools are at a growing disadvantage. Therefore, raising the level of digital inclusion by increasing the number of Americans using the technology tools of the digital age is a vitally important national goal."

Source: Falling Through the Net: Toward Digital Inclusion

The Digital Divide seems to be a significant obstacle for minority populations when we look at access from work or home.

Source:Arbitron and Edison Media Research

What made the difference? Free access provided by US libraries and schools. While the rate of growth in Internet use among white Americans has slowed, it is increasing rapidly among minority populations. By February 2003 over 10 million African Americans were online and Hispanic access is growing rapidly.

Another rapidly growing online population is senior citizens. They have the leisure and, for the most part, the money to be avid online shoppers and bargain hunters.

Most Valuable Internet Segment?

A recent free report from The Wall Street Journal Online and eMarketer, An Elephant in the Room: The Online At-Work Audience, identifies perhaps the most valuable segment of the online population—the 50 million Americans who are online at work. 60% of consumer online dollars are spent in the work place. The size and buying power of this group coupled with it's tendency to use the Net to research purchases makes it a key focus of advertising and marketing efforts. It's a daytime audience that's different from but just as significant as the daytime television audience in terms of buying power. Report highlights include:

More than one-third (37%) of working Americans now go online regularly at the office

70% of at-work Internet users have a college degree or higher

86% of at-work Internet users have broadband access at their work place

Roughly half have household incomes of $75,000 or more

38% of at-work users are employed by large companies, while nearly 40% come from small businesses

At-work users spend more time online than at-home only users; business executives are particularly heavy Internet users