REDMOND, Wash., December 7, 1998 — Trees have lost their leaves, frost is on the ground, and Americans everywhere are turning to one of this season’s favorite pastimes — shopping. While many are out braving the crowds at their local shopping mall, more and more consumers are turning to the Internet and the convenience of online shopping. According to industry analyst Cyber Dialogue, electronic commerce reached record levels last year, with 11.2 million shoppers purchasing $3.3 billion worth of goods online.
What’s drawing all these shoppers to virtual storefronts? Market research shows that consumers tend to use Internet shopping for two specific purposes: product information and research, and actual product purchasing. Of these two categories, information seekers represent the largest demographic of online shoppers, with 29.5 million wired adults using the Internet to search for product information last year.
Product Information and Research
Travel-related sites lead the information and research category in consumer popularity, with more than 15 million users visiting travel sites in 1997. MSN Expedia — Microsoft’s travel Web Site — hosts 3.5 million unique users per month, and is currently averaging around $8.5 million per week in sales. Convenience plays a large role in travel consumers’ decision to shop online. Linda Dominguez, a busy executive who travels 2 or 3 times a month, finds that the convenience of researching and booking her travel online works best with her hectic schedule. “Expedia seems to lower their prices pretty quickly, generally seems to have the best prices, and does a really good job of keeping up with changing travel information,” she said. “I don’t have time to fool around.” Dominguez recently planned a trip to visit her son, and made all of her arrangements online. “I got everything — air, hotel, and car, and it’s all taken care of.”
For travelers more interested in getting away from it all, Expedia offers one-stop travel shopping for cruises, vacation packages, resorts, and other popular vacations. Travelers can research their trip, make hotel reservations, and purchase their travel tickets all in one step. And based on the site’s popularity, growth, and sales forecasts, the future looks bright for MSN Expedia. The site experienced a 400 percent growth in sales from January 1997 to January 1998.
If travel purchases are popular, automobile purchases don’t lag far behind. Last year, nearly a third of Internet-connected adults went online to research car information. When Brian Johnson decided he wanted to buy a sport utility vehicle earlier this year, he used MSN CarPoint’s automobile reviews to research different vehicles advertised in the Sunday paper. Johnson sorted vehicles by price range, researched specs and pricing, and saved himself a good deal of legwork in the process. “The whole process was more convenient, more up-to-date, more timely, and more accurate,” Johnson said.
For new- and used-car buyers alike, the CarPoint site hosts a wealth of information resources, including specs on 10,000 different makes and models, blue book listings, surround video, and graphics features like the “colorizer” that lets users view a car in its available colors. The site’s consistently high ratings, consumer convenience, and easy-to-use features are paying off. This year, CarPoint is averaging 1.7 million unique users per month, 84 million hits, and sales of more than $300 million per month for CarPoint’s affiliated dealers.
Another MSN site, MSN Sidewalk, is geared toward helping users organize shopping resources on the Web, with features like the Sidewalk Buyer’s Guide that provides product information and reviews to help shoppers make informed decisions. Consumers can then consult the MSN Sidewalk Yellow Pages directory to find a nearby store, online merchant, or toll-free numbers to help them make their purchases via phone. An entertainment guide features movies, restaurants, and things to do, all tailored to the user’s specific city.
Other sites are set up more like virtual shopping malls, including MSN Shopping, which organizes vendors into categories and offers users online access to a wide selection of merchant storefronts. “Computers and software is our most popular category, and then right now it’s also skewed toward all the gifts,” said Deborah Levinger, Sr. Business Manager for MSN Shopping. “Our strong categories are computers and software, books, music, flowers, apparel, and toys.” Levinger said it’s still too early to release specific figures, but the site’s use has taken off; traffic has tripled since its launch in October. She said two factors can account for the site’s rise in popularity. “Overall, MSN has an audience that’s very comfortable shopping online. Our users are already comfortable being online, so they’re also more willing to shop online. And, at this busy time of year, MSN shopping provides fast, easy, convenient solutions.” A recently added feature called Holiday Gift Finder helps users tailor their shopping list based on several categories, including price range, age, and shopping category.
Online shopping’s huge gains in popularity are not surprising, considering the growing numbers of Americans connecting to the Internet. Last year, more than 41 million Americans had online access. Experts predict that 45 percent of U.S. adults will be online by the year 2002, and online commerce will surpass $34 billion.
The Microsoft shopping sites reflect this upward trend in online consumerism — according to Internet audience measurement service Media Metrix, MSN was the fastest growing portal site in 1998, reaching approximately 40 percent of all U.S. Internet users. Since Microsoft rolled its Internet services, including Expedia, CarPoint, and MSN Shopping into one portal site earlier this year, referral traffic has increased significantly — as high as 221 percent in the case of MSN Expedia — and continues to show signs of a strong future. Advertising revenue has increased more than 100 percent over the same quarter a year ago, and MSN recently signed some of the largest advertising deals on the Internet, worth nearly $160 million. Across the network, MSN is establishing significant business partnerships to boost online shopping resources. Expedia has agreements with more than 60 travel companies, CarPoint refers customers to more than 2,000 dealers in the United States, and MSN Sidewalk teams with 90 local and national content publishers and more than 6,000 local advertisers.