In its second-largest acquisition, Amazon buys the company for $970 million.
Some 14% of online U.S. households purchased holiday gifts using the Web in 1998, and during the five weeks between this Thanksgiving and New Year, 22% of online households will participate in online shopping, predicts Forrester Research Inc., Cambridge, Mass. The market research firm also predicts that the holiday boom will continue well into 2000.
Half of the buyers that will make purchases online this holiday season-4.3 million shopping households-also purchased gifts online last season, it says. These "experienced shoppers" earn more than $62,000/household, have been online more than three years and have shopped online for more than two years by this fall. They will spend an average of $670 online for the holidays, according to Forrester.
Many online buyers chose to forgo the Web when purchasing gifts last year; however, more than half of this group-3.27 million households-will shop online for holiday gifts this season, it says. This less-affluent, less-experienced group of "holiday holdouts" will spend $300/household on presents, predicts Forrester.
Last year, novice Web buyers made up 14% of holiday shoppers, Forrester says. The trend toward free PCs and free Internet access may draw even more "first-time buyers" to the Web, it speculates. These 1 million newcomer households make up 12% of online holiday shoppers and will spend $150/household on online gifts, says Forrester.
The 8.6 million households that use the Internet to shop this holiday season will look for very different items online. Forrester says consumer electronics, computer hardware and home furnishings will generate nearly $2.2 billion in sales. Convenience goods such as books, CDs and apparel will continue to be popular gifts producing $1.5 billion in holiday spending, it adds. "Rookie" Web shoppers will spend 60% of their $150 online budget on these and other convenience items, Forrester predicts. The only retail merchants that Forrester anticipates will not score big this holiday are those that sell "replenishment goods" such as groceries and drugs. In total, Forrester says they will collect $300 million this season.
Forrester is also predicting that online shopping will not taper off after the holidays as in previous years. It says online retailers should prepare for an additional 11 million new households that will begin buying online in 2000. The company recommends crash-testing sites, hiring more customer service representatives and reassessing security and privacy policies.