Consumers will spend an estimated $12 billion online this holiday season– a 66% growth above the $7 billion generated during the 1999 holiday season, predicts Jupiter Communications, New York.
Of the $12 billion expected to be spent, online retail sales will account for $9 billion, and travel products such as airline and hotel reservations will account for the remaining $3 billion.
Jupiter attributes the continued growth to two factors: online shoppers spending a larger share of their holiday budget with online merchants; and six million Internet users who will make their first online purchase during the 2000 holiday season, driven by a need for convenience and increasing confidence in the channel.
But, warns Jupiter analysts, to reach profitability, marketers must narrow their target to those customers who understand the merchant’s product, have the means to purchase it and are willing to buy it online. Those marketers able to identify this “natural” market will do best, say Jupiter analysts.
During the 1999 holiday season, many online retailers did not accurately assess the size of their natural market, and spent excessively to appeal to customers who had no interest in the products being offered. This year, with financing scarce, it is critical that online retailers understand the size of their natural market and the costs of expanding beyond it.
Jupiter defines the holiday season as Nov. 1 through Dec. 31.
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