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Online shopping (and buying) on the rise

Reports from the Commerce Department and a marketing software vendor have good news for e-tailers.

As the economy picks up steam, e-commerce appears to be picking up right along with it, a pair of recent reports show.

The Census Bureau of the U.S. Department of Commerce released its estimate of retail e-commerce sales for the first quarter of this year. It shows a 28% increase over the first quarter of 2003. E-commerce also made gains on standard retail. E-commerce sales in the first quarter of 2004 accounted for 1.9% of total retail sales, up from 1.6% for the same period in 2003.

Additionally, DoubleClick Inc. in New York, a provider of online advertising, e-mail and database marketing applications, released a report that said online shoppers are spending more time making their buying decisions, though orders made from on-site searches have increased. It also found that while shoppers put more items in online carts, they abandon them more often. DoubleClick based its findings on aggregate data from multi-channel marketers using its software.

While the DoubleClick study compares numbers from the fourth quarter of 2003 with the first quarter of 2004 (and its data is impacted by the holiday shopping season), the report still provides some interesting fodder, said Allen Bonde, president of the Allen Bonde Group Inc., a consultancy in Wellesley Hills, Mass.

"[The study] shows people who are doing searches are buying more stuff," Bonde said. "Also, they're doing things online but not necessarily buying. The Internet is primarily a research channel."

According to the DoubleClick study, average on-site search orders increased 24% from the fourth quarter 2003 to the first quarter 2004.

A perfect example, Bonde noted, is the automotive industry where 80% of customers do their research online but then buy at the dealership. Bonde said companies should invest more in natural language search applications and personalization tools for their Web sites.

"Abandoned shopping carts is lingo from version one of the dot-coms, [with businesses] wanting to convert browsers to buyers," Bonde said. Unless a company is a pure online retailer, he said, companies "should view the Web as a marketing and service channel."

The challenge for organizations is to determine how Web sites are driving people to their brick-and-mortar stores. One company, Behr Process Corp. in Santa Ana, Calif., allows users to shop and compare prices at its Web site and then log on at kiosks in home improvement stores to make the purchase, according to Christian Airth, an analyst with the Allen Bonde Group. Similar efforts are under way with electronics retailers touting "shop online, pick up at the store" capabilities.

Even if some people are only researching their purchases online, according to the Commerce Department, plenty are also buying there. Consumers spent $15.5 billion on e-tail purchases in the first quarter, not counting travel and event tickets.

FOR MORE INFORMATION

Read why e-tailers are their own toughest critics

See how e-commerce sites are trying to retain customers

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