Wednesday, January 17, 2001
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Posted on: Wednesday, January 17, 2001

Online holiday purchases increase

Bloomberg News Service

New York — U.S. shoppers spent $10.8 billion on Internet purchases during the holiday season, a 54 percent increase from a year earlier as more people shopped and bought gifts from online merchants, Jupiter Research said.

About 36 million people bought items from Internet stores during November and December, up from 20 million a year earlier, said Jupiter, which tracks online commerce. It said the average Web shopper’s spending rose to $304 from $286 in the 1999 holiday season.

Overall spending was lower than the $11.6 billion forecast by Jupiter. Although many Internet retailers reported strong gains, some such as No. 1 Internet store Inc. and toy seller EToys Inc. failed to reach analyst’s sales.

"It was still significant growth," said Jupiter analyst Heather Dougherty. "The channel is still growing and it is by no means mature at all."

Online retailers may have missed forecasts because they are affected by the same economic conditions that caused disappointing sales for traditional retailers, Dougherty said. Wal-Mart Stores Inc., Sears, Roebuck & Co. and The Limited Inc. all reported lower-than-projected sales for December as consumer spending growth slowed because of higher energy costs, declining stock markets and poor winter weather in some regions. this month said sales were about $960 million in the fourth quarter, or less than the $1.01 billion average estimate of analysts polled by First Call/Thomson Financial. EToys in December said sales in the fiscal quarter ending Dec. 31 would be about half its projection of up to $240 million.

Online spending should continue to increase as more people get Internet connections and become comfortable with making purchases on the Web, Jupiter said. It forecasts online spending, excluding travel, automobile sales and pharmaceutical purchases, will rise to $36 billion this year from $24 billion in 2000.

Jupiter polled more than 2,000 consumers about Net spending in reaching its figures. The findings are in line with the 60 percent holiday-spending growth reported by Inc., a company that tracks consumer ratings of Web sites.

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