Wired shoppers expected to surge, but security worries remain

By CHRIS ALLBRITTON
Copyright 1997 Nando.net
Copyright 1997 Associated Press

NEW YORK -- Black Friday -- traditionally the busiest shopping day of the year -- has come and gone, and the holiday shopping season is in full swing with Scrooge-y shoppers and massive crowds. But instead of hopping in the minivan and heading to the mall, more consumers are firing up the modems and shopping in the living room.

Online shopping is experiencing the biggest year of its brief tenure. Until now, there weren't enough people or products to make online retail a moneymaking business.

In 1997, the Net grew from 27 million to more than 40 million online, according to IntelliQuest Information Group and Zona Research. America Online topped 10 million subscribers in November, and the average income of Web surfers fell as more people came online. With the surge of new people, established retailers such as Wal-Mart and the Gap hooked up, too.

"This quarter is going to be the biggest quarter ever" for online sales, said Andrew Kantor, editor-in-chief of Internet Shopper, a magazine catering to the digital consumer. "Online shopping is hitting the mainstream and real, honest-to-goodness ordinary people are shopping online."

Jupiter Communications, an Internet consulting firm in New York, is projecting $1.14 billion in fourth quarter sales out of an expected $2.6 billion in total online sales for 1997. Forrester Research in Cambridge, Mass., is a little more cautious, projecting between $750 million and $1 billion in holiday sales and $2.4 billion for the year.

This is just a drop in a very large bucket, however. Holiday sales online and off- are expected to be about $660 billion this year.

Most of the products being bought online this year are computer hardware and software, books, music, flowers and travel tickets, according to Forrester. When Forrester polled 300 consumers, they found that 58 percent had bought computer hardware or software, 46 percent had bought books and music, and 26.3 percent had bought gifts, flowers or greeting cards. Twenty percent had purchased travel tickets.

Sreenath Sreenivasan, who teaches new media at the Columbia Graduate School of Journalism in New York, said he has used the Net for most of these products and has spent "hundreds of dollars" on travel tickets and books.

"It's a very convenient way to shop," he said. "You don't have to worry about store hours."

In addition to convenience, Sreenivasan said he didn't have to elbow his way through the holiday crowds or deal with rude sales clerks.

"The Web is as personal -- or impersonal -- as any shop at this time of the year," he said.

Even with all the benefits of stay-at-home shopping that catalog companies such as L.L. Bean and Eddie Bauer have enjoyed, Web shopping hasn't really been the "killer application" that many in the high-wired industry predicted.

Until recently, security concerns were prevalent and both Netscape Communications and Microsoft Corp. built strong scrambling software into their browsers to prevent thieves from nabbing credit card numbers.

Stuart Spiegel, vice president and general manager of iQVC, the online companion to the cable shopping channel, said as big brand names come online, more people will feel comfortable shopping online.

Concern about security, Kantor said, is "moot. It's dead."

And once a consumer has tried online shopping, said Spiegel, "they're hooked."

Still, Forrester's poll showed that 26 percent of respondents have concerns about security. Robert Warbington, an operating engineer for Lion Oil in El Dorado, Ark., said he was worried about using credit cards on the Net.

"I've only been on the Internet for a year, and I'm still concerned about using a credit card online," he said. Instead, he sends checks or money orders through the mail.

An avid movie collector, Warbington bought from Reel.com, an online video store. He said if more online merchants made it easy to mail payments, their sales might increase.

Lucy Maher, an associate production editor at Warner Books in New York, bought a fleece jacket from L.L. Bean's online site even though she was a little nervous about using her credit card.

"I'm not that savvy enough to know how someone could get it (the number)," she said "But I've heard it's not the most secure system."

But security wasn't a top worry for Greg Merrell, a network consultant in Cupertino, Calif.

"It's the same level of risk -- or lower -- as handing my credit card to a random person at a restaurant," he said.

Merrell said he was a "low to moderate" shopper and had bought almost $2,000 worth of travel tickets, books and software this year.

Maher, Merrell, Sreenivasan and Warbington are all typical in one sense: They knew exactly what they wanted when they went online. Forrester calls this "surgical shopping." More than half -- 55 percent -- of all online purchases are made in this manner.

Maher said she didn't have the printed catalog, but knew exactly which jacket she wanted. Warbington had specific movies in mind. Sreenivasan and Merrell knew what books or software they wanted when they zipped their credit card numbers into the ether.

Regardless of online buying habits, Forrester predicts online shopping will change the rules of retail. More than $17 billion will change hands online in 2001. While only one in four of today's 40 million wired citizens shop online, by 2001, there will be 43 million people shopping online, slightly less than half of the online population.

Copyright 1997 Nando.net


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