Net meeting: let us introduce to the most important people on the Internet. If you think you know e-commerce consumers, this might surprise you

Entrepreneur, Feb, 2003 by Mark Henricks

Dotcom mania may have ended, but selling products and services online has scarcely begun. In fact, estimates from a variety of sources have total online retail sales increasing approximately 30 percent in 2002. And after years of similarly rapid growth, the absolute numbers aren't tiny either: Projections based on the U.S. Department of Commerce's conservative data reports indicate that online sales of goods and services topped $42 billion in 2002. And the Department of Commerce doesn't include online travel sales, which typically account for 40 percent or more of online revenue.

One thing driving online sales growth is the still-increasing number of people going online. Market trackers at Jupiter Media Metrix forecast the number of online Americans will double in five years to 132 million. Because about half of Internet users buy something online during any particular year, that translates to solid growth for online commerce.

The online market isn't just growing; it's also changing. To begin with, the shoppers themselves are transforming. Once mostly men, they're now mostly women. Though the Net is seen as a youthful medium, seniors are the fastest-growing age group. And though ethnic groups have lagged behind the mainstream in embracing online, they are catching up fast. "While the general market is tending to flatten out a little bit, the ethnic market continues to have rapid growth," says Derene Allen, vice president of The Santiago Solutions Group, a San Francisco multicultural marketing consulting firm.

These groups all have their own reasons for shopping online, their own styles and their own favored purchases. They're buying a broader range of products and services as well. Once, goods were divided into those suitable for sale on the Internet and those not suitable. Supposedly, items such as furniture were not online-ready, for instance. But increasingly, nearly everything is being sold on line. Furniture makes up most of the volume at PoshTots, a 16-person Glen Allen, Virginia, online seller of high-end children's products. "Our customers are buying cribs and beds," says Karen Booth Adams, 33-year-old co-founder, "and we sell a lot of playhouses."

Continuing growth of the online market calls for evolving business strategies as well. The frenzy to achieve first-mover advantage that characterized the early years of online retail has subsided. Today, selling online is less about having the latest technology and more about having the best insight into customers. "It's back to tried-and-true principles of marketing," says Keith Tudor, professor of marketing at Kennesaw State University in Kennesaw, Georgia. "Look at your customers' wants, needs and motivations."

Working Women

The big news about online retail in 2002 was the emerging dominance of female shoppers. Women now make up a majority of Internet users, and, given the fact that women disburse the bulk of all dollars spent in retail, that is good and important news for e-commerce. It's good because it portends future growth, and it's important because women don't shop like men, and they don't buy the same things.

Generally, women are more interested in health information, services and products, and less interested in financial activities. Home decor, gardening gear, clothing and toys are all product categories women tend to favor. It's also worth noting that because women do the bulk of holiday shopping, their increasing numbers online mean the Internet will get a greater share of the year-end buying rush.

In one trait, women are like all online shoppers. That is, they are using the Net in search of products and services they couldn't locate offline. Ninety-five percent of PoshTots' customers, for instance, are women looking for specialty items that they haven't had the time, energy or opportunity to find in their local brick-and-mortar stores. Says Adams, "It's a matter of time, convenience and selection."

Male Shoppers

Women may outnumber men online, but men still spend more time and money online. The main reason: Men shoppers still mainly purchase costly equipment such as stereos, computers and other electronic hardware. They make up the overwhelming majority of visitors, for instance, at Dell.com, CompUSA.com, HP.com and other high-tech, high-volume online retailers.

It's not all tech, however. Niche markets of many types for men make good opportunities for smaller online retailers such as GroomsOnline, a one-person West Hills, California, company that sells gifts for best men and groomsmen such as silver flasks, money clips and beer steins. One thing founder Mark Walerstein, 41, likes about male shoppers is, they are not especially price-sensitive. He bases the idea, in part, on the fact that his most expensive item--a $56 personalized baseball bat--is also his best seller. "I sell close to 100 bats a month," he says. "They don't balk at the price."

Men still aren't as attractive as women when it comes to building a business, however, because they tend to be disloyal, says Paco Underhill, author of Why We Buy (Simon & Schuster) and CEO of New York retail consulting firm Envirosell Inc. "You are looking for a customer base that is repeat customers," says Underhill. "Generally, guys aren't very good customers."