February 27, 2003, 12:00 AM

The Web as the #1 Path to Purchase

We are witnessing the most significant change in consumer behavior that has ever occurred in the U.S., and it’s taking place with stunning speed.

Late last month, as I prepared to board a Southwest flight in Chicago to attend an e-retailing conference in California, I was relieved to discover that Southwest had installed kiosks where I could print my boarding card, which is now required prior to passing through security. I inserted my frequent flyer card into the machine, which instantly retrieved my e-ticket information and printed my boarding pass. As I strolled past the long lines of passengers waiting for boarding passes from agents, I reflected that for the last three years all of my air travel arrangements have been made and my tickets purchased on the Internet. What in the world, I wondered, has happened to the travel agent who had served me for two decades?

This is by no means the only case where my purchasing behavior has been converted entirely from a person-to-person experience to a computer-to-computer transaction. An avid Chicago White Sox fan, I attend about 20 games a year, but for the last two years, I have not purchased a single ticket from the box office or a scalper. I order all my tickets online and pick them up at the will call window, which no doubt will someday be replaced by the same card-kiosk combination Southwest uses to issue my boarding passes.

My last computer purchase from a store was also two years ago, but since then our small company has purchased a half dozen computers online, most from Dell.com, where we can design the computer to our exact specifications and have it within days. I cannot imagine going into another computer store, and I wonder when Dell will realize I no longer need the printed catalogs they continue sending me. Why would I flip through a catalog when I can comparison shop for computers much better online?

I could cite other examples to illustrate my point that in very short order the web has become the only place many people shop for certain types of goods and services. My Christmas shopping is almost exclusively web-based, and my personal apparel purchases are moving in that direction. If this is happening to me-who slightly pre-dates the Baby-Boom generation-what will happen when post-PC generations account for most of retail sales?

What we are witnessing, I think, is the most significant change in consumer behavior that has ever occurred in the U.S., and it’s taking place with stunning speed when compared to similar consumer transformations. The first ATM was introduced in 1968, but by 1982, when I launched a newsletter on ATMs, there were only 10,000 in the U.S. Many experts were convinced the industry had hit a so-called “33% wall” that separated early adopters of electronic banking from the majority of bank customers who preferred manual tellers. Today, there are more than 350,000 ATMs in the U.S., and a whole generation of Americans who have never stepped foot inside a bank lobby. Similarly, the general purchase credit card, invented by Diners Club, in 1950, did not become a truly significant payment tool until 20 years later, and even now cards account for only 30% of retail purchases.

There is no question that web retailing has built a solid base of early adopter business in its first seven years. When the Commerce Department reported last month that retail sales on the Internet grew 27% in 2002, compared to 3% for all retailing, it documented what industry experts already knew: e-retailing is the only bright spot in all retailing. I do not argue that these trends spell the end of stores and catalogs, but I do believe they put them on a long declining road. If in less than a decade, the web can become the preferred path to purchase airline tickets and computers, it cannot be long before it establishes hegemony in dozens of other retail segments.


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