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Study: Net shopping doubled in '97

Online purchases in the United States double in 1997 but online banking does not fare as well, a market researcher says.

Online purchases in the United States doubled in 1997, according to a new study.

The report, by market research firm Odyssey, found that 30 percent of households with Net connections made a personal purchase from home in the last six months, a 50 percent increase from a year ago. This corresponds to the study's findings that 23 percent of U.S. households are now online, up from 17 percent a year ago.

The growth of electronic commerce has been carefully monitored by businesses and industry analysts. After promising holiday sales online, Net companies from retailers to sites aiming to be "portals" and online communities have turned their attention to e-commerce. Many, such as Net community GeoCities, are hoping that e-commerce deals can provide them with new revenue to supplement advertising.

A recent study by Zona Research predicted that companies that create e-commerce software can expect a boom in business over the next five years.

In hard numbers, Odyssey said almost 7 million households bought something on the Net in the last six months of 1997 vs. 3.2 million for the same time period a year earlier. Moreover, the study found that those shopping online have done so an average of 1.7 times in the last six months of 1997, up from 1 time in 1996.

"It's clear that 1997 was the year that millions of Americans tried buying something on the Internet and most realized that nothing bad happened--their credit card wasn't stolen, their merchandise showed up, and it was pretty easy, so they went back for more," Nick Donatiello, president of Odyssey, said in a statement.

The Homefront study of 2,500 Net users, which Odyssey has conducted twice each year since 1994, found that many households are using the Net even if they don't want to buy online. Fifty-five percent of Net-equipped households in the survey got information about a product or service online before making a traditional retail purchase, and 41 percent said they have made a buying decision in the last six months because of something they learned online.

The results were not as bright for online banking, however. Odyssey said that while 52 percent of those surveyed have monitored, made, or gotten information about electronic investments, only 15 percent have used the Net for banking services, such as paying bills, getting account information, or transferring funds.

Donatiello cited shortsightedness on the part of banks and credit card companies.

"This distinction between investing-related and banking-related activities is instructive. Discount brokers have figured out that if they pass some of the savings associated with online transactions to the consumer, they'll attract customers faster," he said. "Most banks and credit card companies appear to lack this insight. In fact, some banks are foolish enough to think they can charge consumers extra for lowering the bank's transaction costs."