The good news for online retailers this holiday season is that online spending may rise from $4.5 billion to $12.2 billion. The bad news is that flawed site marketing practices may cost merchants more than $6 billion.
The optimistic prediction, the near tripling of online spending, comes from analyst firm GartnerGroup’s Dataquest unit. According to a new survey, 64% of online users will spend up to one-quarter of their total holiday budget online. Survey results also indicate a growing acceptance of Web-based commerce: 48% will be new online holiday buyers. And more than four out of five respondents said they were not afraid of Y2K problems affecting their purchases.
The research springs from a survey of 420 randomly selected households that use the Internet and have purchased or plan to purchase online in the future. The survey was conducted on behalf of HP Shopping Village (http://www.hpshopping.com) the direct-to-consumer electronic retail site of Hewlett-Packard Co.
But another study asserts that online retailers are not taking advantage of marketing practices that would maximize the value of their customers. According to Creative Good’s new report, Holiday E-Commerce ’99:
* In tests, 39% of shoppers failed to complete their purchases because the sites were too difficult to navigate, potentially costing retailers more than $6 billion;
* Fifty-six percent of online retailer search attempts failed in tests. If just half of them had been successful, and resulted in sales, the online industry would have realized an additional $7.9 billion; and
* During the holiday 1998 season, every dollar spent on advertising generated less than $5 in total revenue. By contrast, according to Creative Good, every dollar invested in creating a positive customer experience yielded $60 in incremental revenue.
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