- The Washington Times - Tuesday, September 19, 2000

More shoppers are expected to use the Internet during the holidays this year, according to a survey released yesterday.

Americans will spend about $12 billion in on-line purchases during the holidays, an increase of 66 percent over last year, Internet research firm Jupiter Communications said.

The prediction comes despite a rocky 1999 season that saw better-than-expected sales figures by on-line retailers but significant problems with unmet demands or leftover merchandise by some companies.

Despite electronic commerce's growth, on-line use still will total only 6.5 percent of all holiday spending, according to the National Retail Federation.

The Jupiter survey said on-line retailers will spend less on advertising and more on marketing efficiency and likely will focus their resources on returning customers rather than acquiring new ones.

"We are in agreement and not all that surprised," with the predictions, said Marlo Zoda, spokeswoman for CDNow, an on-line music retailer. "Certainly, we are spending less this year on off-line [advertising]. This is our sixth season, and we have learned a lot about our customers' buying habits."

To save money, CDNow has shifted much of its advertising to radio, and the company plans to continue bringing back past customers through e-mail, she said. The company's marketing department began planning for the all-important season back in June, Mrs. Zoda said.

Last year, Jupiter predicted $6 billion in on-line sales during the 1999 holiday season, a prediction that was surpassed by $1 billion.

But several companies misjudged their markets last year by spending excessively to attract customers who weren't interested in their product, Jupiter said. In the survey, Jupiter analyst Ken Cassar pointed to the plight of Boo.com, a now-defunct British clothing retailer that he said "spent extraordinary sums of money chasing a market buyers of hip, urban apparel that could have been a niche market, but was not a mass market."

The most-publicized disaster last holiday season involved Toys R Us.com, which failed to deliver thousands of orders by Christmas as it had promised customers. A repeat is unlikely now that the toy company has joined with on-line retailer Amazon.com, which will take care of all customer service and delivery issues.

Although the holidays bring a boom in sales for retailers, the degree of sales increases differs depending on the products being sold, company representatives said. Amazon.com and E-Toys receive the biggest boom because of their gift-related product base, but other on-line retailers, including Pets.com, said they experience only moderate gains.

"Our business isn't really all that seasonal," said Pets.com spokeswoman Melissa Menta.

Last year, Internet sales comprised 4 percent of $173 billion in holiday sales, up 2 percent from the year before. But the National Retail Federation reported that 88 percent of consumers who shopped for gifts on line during the holidays last year abandoned their computers at some point.

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