- The Washington Times - Friday, November 24, 2000

On-line retailers are folding because they can't get funding, but shoppers are spending record amounts on Internet purchases.
U.S. consumers spent nearly $1.2 billion on line Nov. 6-12, just two weeks into what retail analysts consider the holiday buying season, according to a new report by Reston research firm PC Data and investment banking giant Goldman Sachs & Co.
Last year, weekly holiday spending on line didn't reach $1 billion until the second week of December.
"It's not surprising that it's happening. It's a little surprising that it's happening this early," said Cameron Meierhoefer, PC Data Internet analyst.
On-line consumers bought more books and clothes than any other items during the week of Nov. 6, according to the study. More than 1.2 million people spent $55.9 million to buy books on line, and an estimated 1 million consumers spent $113.8 million to buy clothing on line.
PC Data and Goldman Sachs surveyed 2,340 Internet users for the study.
During the same seven-day period in November 1999, consumers spent $186 million on line.
While Internet sales are surging, they still represent only a fraction of all sales. Holiday retail sales reached $186 billion last year, according to the National Retail Federation.
One change that led to this year's increase in on-line sales is the rising number of Internet users. About 90 million people are on line now, compared with 75 million people a year ago, according to PC Data.
Sales are also up compared with a year ago because holiday shoppers don't want to risk having gifts get lost among last-minute deliveries. Mr. Meierhoefer said researchers expected on-line shopping to spike earlier this year as people try to beat the holiday rush for on-line deliveries, but the billion-dollar spending spree during the second week of November was more pronounced than expected.
The Federal Trade Commission last year issued more than $1.5 million in fines to on-line retailers who violated a rule outlining the ground rules companies must follow when making promises to consumers about shipments.
Internet retailers are confirming the research by PC Data and Goldman Sachs.
Jim McCann, chief executive of Westbury, N.Y.-based 1-800-Flowers.com, said Internet sales this holiday season are surging, despite the failure of on-line companies like Pets.com, which said Nov. 7 it would close.
Internet failures have made consumers more wary about with whom they do business, Mr. McCann said.
"Consumers are reluctant to trust companies with their Christmas orders if they don't think they will be around to deliver," he said.
That means traditional bricks-and-mortar retailers like JCPenney.com and Sears.com are winning the business of on-line shoppers, Mr. Meierhoefer said.
"Consumers are increasingly going to sites that they are familiar with. They aren't as likely to go with names they have never heard of, especially with all the failures lately," he said.
PC Data estimates Internet users will spend $10 billion from Nov. 1 to Dec. 31, up from $5 billion for the same two-month period last year.
Industry analyst Jupiter Communications estimates that Internet sales during this holiday season will reach $11.6 billion.
The PC Data research indicates that 88 percent of people surveyed said they plan to spend the same or more than they did last holiday season. But Jupiter also said this week U.S. families will spend an average of $475 on Christmas gifts, $5 less than last year.

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