Demographics of online consumers
Internet shoppers view convenience and time management as key elements in their active lifestyles. The average buyer is a wealthy and well-educated male, according to a study by Scarborough Research (http://cyberatlas.internet.com/big_picture/demographics/article/0,1323,5901_256591,00.html). Almost 60 % of e-shoppers are male, 70% attended college, 65% have white-collar jobs, and over 36% have a household income of $75,000 or more. E-shoppers enjoy a rich, active, and diverse lifestyle. More than half have taken a trip abroad in the past year, 37% belong to frequent flyer programs, 45% have attended a professional sporting event in the past year, and 24% have health club memberships. Other lifestyle activities include photography (34%), swimming (52%), biking (40%), and camping (24%). In addition, over 57% of Internet users have shopped for and 51% have purchased goods or services online. The typical online purchaser had completed ten transactions and spent $460 online over the last twelve months, with a failure rate of 28%. The other 43% has similar habits and lifestyles to e-shoppers, but their Internet usage patterns are not as diverse and usually require additional enticements to shop online. Despite the fact that they engaged in online activities, the benefits of online shopping were not self-evident to this particular group
Internet consumers enjoy several advantages over retail shoppers, including but not limited to: advantages of choice, convenience, better information, and customization (http://www.ecommerce.gov/danc6.htm). Examples of increased choice include online bookstores and access to newspapers all over the world. Examples of increased convenience include 24-hour per day access to stores and next-day delivery of products. Online shoppers also have more access to product information. For example, Auto-by-Tel gives car buyers dealer invoice pricing, manufacturer rebate information, blue book pricing, and car specifications. Insurance can also be purchased over the Internet, providing information on company ratings and quotes. This increased access to is an advantage to the buyer who does not have to rely on a salesperson, whose interest in making a sale might conflict with the customer’s true needs. Finally, buying online offers the potential for increased customization of products. Electronic and computer purchases allow the customer to customize according to price and performance requirements.
Online purchasing also has its downsides. In a recent e-commerce study of online consumer behavior, Boston Consulting Group (BCG) revealed that Internet shoppers frequently experience purchase failures, security fears and service problems. The study also found that 28% of online purchases failed over the past twelve months. In addition, four out of five consumers experienced at least one failed attempt purchase over the same period. These failures resulted mainly from site technical problems, difficulty finding products, and post-sale delivery problems.
BCG also identified three types of online consumers, or “adopters”. Pioneers are comprised of 23.2 million users who have been online for three or more years. Early Followers are the 39.6 million users who have been online from one to three years. Finally, First-Of-The-Masses are those who have only recently bought online within the last year (http://www.bcg.com/consumer_promise/press_release.asp). The first online purchase was clearly the most important sale for gaining long-term customers, as most online buyers were not too forgiving if problems occurred. Dissatisfied first-time buyers spent only $140 online during the next year, compared with $500 for satisfied consumers. A study by the Wharton School of Business further supports this, finding that 15% of online buyers from 1997 did not buy online in 1998. These were likely dissatisfied first-time buyers.
(http://cyberatlas.internet.com/big_picture/demographics/article/0,1323,6061_271961,00.html).
The Internet and new information technology offers huge benefits, but at a price: less and less privacy. Buyers are often required to provide personal information to receive products or services, but the constant recording of this information and the ease of snooping is alarming to online consumers. A survey by America’s Federal Trade Commission found that 80% of American users are concerned about online privacy issues.
The power to gather and disseminate data electronically is growing at a tremendous pace, raising the issue of whether our privacy is under attack. Policing such massive amounts of data is apparently beyond the capability of any government, unless it carried out a crackdown so massive that it would stop the new information economy in its tracks. Regulatory and legal steps also have their own limitations. A Federal Trade Commission survey of 1400 American internet sites last year found that only 2% had posted a privacy policy compliant with the Commission’s requirements. Some recommended solutions include:
(http://www.economist.com/editorial/freeforall/19990501/sf1247.html)
Despite all the hype concerning online retailing, it still only accounts for about 1% of all retail sales. Despite the benefits of e-shopping, which include cost savings, convenience, and huge selection, the question becomes: why aren’t more people doing it? One reason is that shopping is a human social activity that the web cannot easily duplicate. Another is that the web depends solely on the sense of sight. You cannot touch, pick up, and turn an item around, or know what it feels like. This might explain why online retailing is currently centered around three industries: music, books, and toys. These items are very generic and are often the same in competing stores. Consumers are reluctant to buy items online with which they cannot have physical contact, such as clothes and groceries. Also, consumers are very conservative and are rooted in the here and now. They do not want to wait a week to receive a purchase when they can go to a bricks-and-mortar store and get it immediately. Consumers are also leery of giving out credit card numbers over the Internet for fear of fraud. While business-to-consumer sales have achieved significant growth in the past year, 80% of all transactions are still business-to-business. It is widely thought that business-to-consumer sales will climb dramatically as people who grew up using computers become old enough to start buying online.
(http://www.economist.com/editorial/freeforall/20000226/su7636.html)