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Online sales numbers still fuzzy

Analysts remain wary of putting solid numbers on consumer shopping online, particularly on whether sales hit the $1 billion mark around the holidays.

Internet commerce boomed last year, but analysts are still wary of putting solid numbers on consumer shopping online, particularly on whether sales hit the $1 billion benchmark around the holidays.

"We feel pretty confident--given the anecdotal data from America Online, BarnesandNoble.com, and others--that not only did we reach $1 billion in sales around the holiday but most merchants are continuing to grow as a result of the surge around the holidays," said Jupiter Communications' Nicole Vanderbilt, who won't formally analyze holiday shopping until later this year. Jupiter had forecast that consumer sales might hit $1 billion.

Kate Delhagen of Forrester Research had forecast fourth-quarter sales of $750 million for consumer online shopping but said $1 billion might be reachable. She said fourth-quarter consumer sales certainly hit $750 million, but it's too early to say $1 billion.

"We're headed in the direction of $1 billion. If we didn't reach that, we didn't fall far short," Delhagen added. "I think the first quarter of 1998 will do the same."

Indeed, analysts are more interested in how the Christmas surge may affect consumers' online buying patterns for this year.

"We believed all along it's not so much the dollars but the customers Internet merchants acquired, getting them to try online shopping," noted Vanderbilt, theorizing that customers who try online shopping will use it again.

Research from online publisher PointCast on its users, an audience skewed to the upscale and time-pressed, backs up that assumption.

"The fourth quarter was a real inflection point for online commerce," said PointCast's Lisa Gerould, director of advertiser marketing. "The holidays drove new buyers to the Net. We found that 40 percent [of a random survey of PointCast users] bought in the holiday season, up from 32 percent in October."

A third of the season's buyers made their first purchase over the holidays, according to PointCast's survey, which generated 629 responses. A third of pre-Christmas buyers spent under $100; 28 percent spent $100 to $300; 25 percent spent $500 or more; and 13 percent spent more than $1,000. The biggest spenders generally bought a computer, Gerould said.

One reason analysts are offering so few figures on total holiday spending is that the biggest online merchants are publicly traded companies that mostly haven't reported their fourth-quarter results yet. Onsale, Amazon.com, and AOL haven't said much about their holiday traffic.

However, BarnesandNoble.com says its online sales reached $5.6 million for the nine-week holiday season. AOL, which predicted prior to the season that its retail sales of products and services would reach $150 million, reported that its business for the first two weeks after Thanksgiving was double that of the comparable 1996 period.

Electronic Advertising and Marketplace Report, a Cowles/Simba newsletter, last week estimated revenues for 52 specific companies selling music, computers, flowers, gifts, and travel services online.

Sales of those companies totaled $7.03 billion, with less than $1 billion in consumer categories. The biggest revenue generators were in the business-to-business computer sector: Cisco Systems is estimated at $3.2 billion, Dell Computer at $1.01 billion, and Digital Equipment at $950 million.

"Business-to-business is the backbone of the industry, and it will be for some time," said Matt Kinsman, editor of the Cowles/Simba publication.

In fact, one niche player, Instill, reported that restaurants and food services bought $180 million in food and supplies through its service last year, more than any of the consumer-focused Internet commerce sites.