A Tale Of Two Consumers - online shopping - Statistical Data Included

American Demographics, Sept 1, 2001

One of the realities of this tightfisted era - where even Amazon shareholders demand a profit - is that well-known brands, by virtue of their ability to attract customers, are also the ones best able to offer online bargains.

Susan Nolte is a discriminating online shopper. Nolte, a 26-year-old sales manager from Pelham, N.Y., rarely buys from Web sites she hasn't heard of. Instead she makes her online purchases from a handful of e-tailers she trusts - a book for her father from Amazon.com, a wedding present from Williams-Sonoma.com and clothes from Jcrew.com.

Nolte's husband, Chris, is also a discriminating online shopper - but of a different type. He likes to get recommendations on what to buy from people he trusts, and upon such encouragement, he'll patronize just about any Web site that offers the right deal. Recently, after receiving advice from members of an online community called Harmony-Central, the 27-year-old financial analyst bought software from a site he'd never heard of (MusiciansFriend.com) because the Oregon e-tailer offered it at the lowest price.

Online shopping may never again experience the kind of 150 percent annual growth that it did during the dot-com boom, but it remains a significant sales channel. While total retail spending is up 3 percent for the first six months of this year compared with the same period last year, business-to-consumer online sales are 13 percent higher, according to estimates by the National Retail Federation and Forrester Research. Even with the dot-com crash, online sales to consumers (as opposed to sales to businesses) are expected to keep climbing. EMarketer estimates that Internet sales will grow to $101 billion by year's end, a 69 percent rise from 2000 figures, and to $428 billion by 2004. "E-tailers have finally gotten their operations sorted out, and now can zone in on the customer," says Helen Malani, an executive with the shopping portal Bizrate.com. Adds David Schehr, e-business research director with Gartner, the Stamford, Conn.-based consultancy, "Attracting business is now the greatest challenge. And understanding those customers is a new science."

Indeed, online shoppers have their own psychology, and two distinct types of buyers are emerging: those who shop for convenience and those who shop for price. Susan Nolte makes her purchases online because it's easy; husband Chris approaches online shopping as if it's a kind of tech sport where the object of the game is to find the best price. Those differences are upending old stereotypes about how men and women shop. "Online shoppers are beginning to mirror the demographics of the population at large, but the Internet is a different shopping medium, which causes people to behave differently," says Alessandro Isolani, the CEO of eBates, a San Francisco-based retail portal that hired Harris Interactive to conduct a large-scale study of online shoppers.

Isolani's observation is certainly true of the Noltes. In the offline world, Chris wouldn't dream of spending hours at the mall, browsing one store after another in search of a bargain. "I have been known to hit the after-Christmas sales at my favorite stores, but I don't really have the time or the desire to scope out every bargain basement in town," he says. Online shopping is another story entirely. Before he begins to shop for his hobby, he usually logs on to Epinions, or a hobby-specific community like Harmony-Central or DanceTech to poll others about what to buy. Once he knows what he wants, he uses all available means to find it for the lowest price. His enthusiasm for bargain-hunting isn't confined to hobbies. When traveling, he always tries to score cheap airfare from a number of different sites. And he takes care of the family finances with Chicago-based Bank One's WingspanBank.com, which offers above-average interest rates.

As for Susan, she likes shopping at the mall, which she often uses as a social occasion, a chance to spend time with her mother. The two browse from one store to the next, and lunch together at the food court. Her online habits are more matter-of-fact exercises in expediency. Because she works a busy sales and marketing job, shaving off a few dollars here and there is not a priority. She squeezes in time between conference calls and during short breaks from work to shop online. She can eye a site and tell if it's reputable, but finds herself using many of the same sites repeatedly, sites she trusts, often because she has shopped at their affiliated stores offline.

About 70 percent of all Internet shoppers today are evenly split into one of two main categories: Bargain Hunters or Convenience Shoppers. In June alone, these categories accounted for 9.2 million of the 13.1 million households that shopped online that month, according to Forrester Research estimates. In an attempt to discover the demographic composition of these two types of shoppers, eBates commissioned the report from Harris Interactive. Harris polled 3,000 online consumers in an attempt not just to divide people into conceptually defined clusters, but also to get information on the attitudes, habits and technological savvy of Net shoppers.