C Prompt
The 1999 Internet Report

January 13, 1999

This has been a staggering year for i-commerce with sales toping 61 billion! The lion’s share of sales were in the wholesale arena, but retail sales are gaining fast…

Basic Internet Statistics for 1998
Detail's of The Ten Lessons of 1998
Top Ten Internet Sites
Average amount of time spend on line per week
Demographics for 1998
Online Advertising for 1998
Online Retail for 1998
The Average size of an Internet Purchase in 1998
Holiday Statistics for 1998
Top Web Site Reach Statistics for 1998
Contact Information

The Ten Lessons of 1998:

1	Surveys show 95% of the visitors to your web site want to be informed and not entertained.
2	It’s content, not advertising.
3	Senior Citizens will emerge as a huge front runner demographic in Internet Sales.
4	You have two years at the most to get it right.
5	The brand name is not king, yet...
6	Get into online commerce with a business model that will not drain your bank account.
7	Online sales are replacing catalog sales while simultaneously chewing on old-fashioned "brick & mortar" store sales.
8	The online customer is ruthless and impatient.
9	Studies show that people repeatedly mention price, not payment security, as a primary concern.
10	Your products need to be in a specific price range.

Basic Internet statistics:

Over 1 million U.S. small businesses are online.
For 1998, estimates indicate 8 billion in online retail sales, $50 billion in online wholesale, and 3 billion in advertising.
One half of the adult population of the United States are regularly online and cruising the web.
70 million Americans are online with 150 million people worldwide.
16.8 million Americans have purchased at least one product or service online this year.
The average online family did 26% percent of their holiday buying online!
The average user spends 4 hours a week a online.
40 Million additional Americans plan to go online in the next 6 months
The American online population levels are expected to reach saturation by 2002 with growth shifting to Europe and Asia.
62% of the people online said that information they found online directly influences their retail purchases.
40% of online users get their news from online services
12% of online users go to the web for breaking news.
Forrester Research predicts that U.S. online retail will exceed $100 billion and wholesale will exceed $1.3 trillion by 2003

Top Ten Internet Sites
Ranking	Name	Percent Reach	Percent views from cache
1.	AOL Websites	53.71	30.50
2.	Yahoo!	53.48	22.04
3.	Lycos/Tripod/Who Where/Wired	50.47	28.16
4.	MSN/Hotmail/MSNBC	47.79	25.67
5.	Microsoft	45.91	31.52
6.	GeoCities	39.55	24.98
7.	The Excite Network	39.11	21.17
8.	Netscape	38.94	14.73
9.	Infoseek	28.07	32.34
10.	Walt Disney Online	26.91	28.11

Average amount of time spend on line per week
Percentage of Users	Hours on line per week
23%	2 or less
26%	3 – 5
24%	6 – 10
9%	11 – 15
8%	16 – 20
9%	21 or more

Detail's of The Ten Lessons of 1998:

1	Surveys show 95% of the visitors to your web site want to be informed and not entertained. The average customer is far more educated than a typical walk-in customer, don’t try to sell them; try to provide an unbiased education. Half of the people online use the Net as their first source of information when planning a major purchase or investment.
2	It’s content, not advertising. The average person clicks on 0.63% of the banner ads they see. Get rid of the ads and replace them with real information.
3	Senior Citizens will emerge as a huge front runner demographic in Internet Sales. Spending for the age 55+ grew from $281 last year to $1819 this year! Internet sales are a dream come true for seniors. They can do their shopping in private, in bed, and in their pajamas. They do not need to drive a car. And they will be treated with just as much respect as any other customer. The web is the great equalizer for the over 55 age shopper. In a networked future, age discrimination could easily be replaced with age favoritism.
4	You have two years at the most to get it right. By year 2002 the American population on-line will have reached saturation. With on-line sales volume doubling each year, the losses from not being online will be great as you are left behind.
5	The brand name is not king, yet... The market is still wide open since 49% of the shoppers go online for shopping or research without a brand name in mind. If their shopping experience at your site is noticeably better, they will be back regardless of the name recognition of the products you sell.
6	Get into online commerce with a business model that will not drain your bank account. Treat your online venture as if it were a new business. Like all start up businesses, you will need to carry this part of your business for 12 months or more. Right now only 5% of the on-line retail businesses will turn a profit in 1999. Compare that to the national small business statistics of a 10% survival rate for first year businesses. These two numbers are not all that different for successful Internet or conventional small start-up businesses.
7	Online sales are replacing catalog sales while simultaneously chewing on old-fashioned "brick & mortar" store sales. One million families did more then 90% of their holiday buying online (that’s only 4% of the online population). This is a powerful indicator of the future as more families and more businesses come online. Quick easy shopping at competitive prices will change everything. Of online shoppers, 19% are doing less retail shopping, and 20% are doing less catalog shopping.
8	The online customer is ruthless and impatient. An average shopper’s entire experience lasts 15 minutes from browsing the aisles to completing the sale. 88% of the people shop online to save time… Your site must be very easy to navigate. I have to repeat this, "Very easy to navigate." 73% leave a site if it takes more than two or three clicks to get to the information they want. Do not try to force people to read your content by hiding information links within paragraphs of text. Always provide an outline with links at the top of the page. The days of difficult or slow sites are over. If your site doesn’t work quickly and easily, your customer is going to become old history. If an online shopping experience is poor, you will lose 30% of those customers completely. When abandoning an online shopping experience, 30% decided not to purchase the item at all…. period!
9	Studies show that people repeatedly mention price, not payment security, as a primary concern. People are on-line to save money almost as much as they are trying to save time. However, they want a "good deal" on quality products. While they are interested in price, they are not using the web to buy "junk." They want quality, priced reasonably.
10	Your products need to be in a specific price range. Trinkets do not sell well on the Internet. 96% of all successful products cost between $10 and $999 dollars. The biggest category is the $20-$50 range which garnered 25% of all Internet sales. Products selling for less than $10 account for only 4% of sales, while 17% of sales are for products costing over $1000.

Demographics:

43% of online US households earn over $60,000, while just 23% of total US households earn more than that amount.
Rural poor are the least connected population group
The wage earning numbers are moving toward parity with the general population. Of the 40 million planning on going online in the next 6 months, half make less than $50,000.
45% of online are female and 55% are male

Online Advertising:

The average user sees 93 banner adds a week.
The average user clicks on 0.63% of the banner ads they see.
5.1 Billion is projected to spent on advertising 1999
68% of large companies advertise on the Internet, up from 38% in 1997
Large companies spent on average $714,000 on Internet ads.
Large companies spent 300% more in 1998 on Internet ads.
The largest accounts, Microsoft and IBM each spent $8 million on web advertising in 1998.
93% of lawyers polled said they expect the level of Internet advertising in the legal field to increase over the next three years.

Online Retail:

Online buying by the public doubled from 1997 to 1998.
Only 5% of online ventures will turn a profit in 1999.
Estimates indicate 8 Billion in online sales for 1998 with 3.5 Billion is sales for 4th quarter alone.
Because of rapid growth, almost half of the total sales for 1998 happened in the 4th quarter.
Online shopping is cannibalizing other mediums, 19% percent of the shoppers surveyed are doing less retail shopping, 20% are doing less catalog shopping.
Forrester Research predicts that U.S. online retailing will surpass $100 billion by 2003 (that’s 6% of total U.S. Sales).
Forrester Research predicts $1.3 trillion in wholesale sales by 2003
Average monthly sales revenue (among retail sites that generated revenue) is $40,273, up from $13,260 at the same point in 1997.
The old benchmark Dell Computer is selling $6 million a day on the web; that’s up a 100% from last year… and Dell predicts that within two years half of their business will be over the web!
The average shopper bought 9 products and spent $475.
16.8 million Americans have purchased at least one product or service online this year.
Predictions indicate that 32 million, 16% of the American population will buy online by the end of 1999.
The average shopper spent 15 minutes to shop and make a purchase at a specific site.
62% of the people online said that information they found online directly influences their retail purchases.
50% of the people online used the Net for information first when they planned a major purchase or investment.
49% go online for shopping or research without a brand in mind.
92% of visitors to web sites go to be informed. Only 19% percent of visitors go to be entertained.
83% of potential customers who leave a Web sites do so because of frustration with navigation. Out of those who leave, 73% leave a site if it takes more than two or three clicks to get to the information they want.
88% of the people shop online to save time
90% of the people shop online because of 24-hour access
77% of online browsers and 64% of non-shoppers state that greater discounts will spark online buying behavior.
Studies show that browsers cite price, not payment security, as a primary concern.
When abandoning an online shopping experience, 30% decided not to purchase the item at all, and only 25% turned to brick-and-mortar stores.

The Average size of an Internet Purchase:

2% of the sites successfully sell products costing $10 or less
30% of the sites successfully sell product for less than $100
30% of the sites successfully sell product for $100 to $999
16% of the sites successfully sell product for over $1000

Price	Percentage of transactions
Less than $10	2%
$10-49	24%
$50-99	13%
$100-499	25%
$500-999	7%
$1,000-9,999	13%
$10,00+	4%

Holiday Statistics:

The holiday spending of the average person rose from $216 last year to $629 in 1998.
The average online family did 26% percent of their holiday buying online! The 35-44 age group performed about 30% of their holiday shopping online.
4% of the families online did more then 90% of their holiday buying online.
The specialty retailer category (cards, chocolate, perfume, etc.) went up 80% in the days before Christmas.
15.8% of all items sold on the Internet this holiday season was specialty products (cards, chocolate, perfume, etc.) that is an 80% increase from 1997.
Spending for over age 55 grew from $281 last year to $1819 this year!
Almost 60% percent of the people shopping online made their 1st online purchases this year.
Online buying by women rose about 300% this year.
Online buying by men rose about 150% this year.
AOL’s (America Online’s) 15 million members spent about $1.2 billion online through AOL from November 26 to December 27, 1998.
Spending for age 50 and up grew over 550% from last year.
Age 50 to 54 grew from $97 in 1997 to $626 in 1998
Specialty retailer FragranceCounter.com announced that more than 2.3 million visitors shopped at its site in the fourth quarter of 1998, compared to 651,000 visitors during fourth quarter 1997.
Amazon.com announced that its 4Q sales were $250 million, up more than 350% over 1997's fourth quarter sales of $66 million.
40% of the computer products purchased this season, were purchased online.

Top Web Site Reach Statistics:

Reach of Top E-Commerce Sites during Holiday Shopping
Week of Nov 27		Week of Dec 18
	Percent Reach		Percent Reach
Amazon.com	8.05	Bluemountain.com	12.72
Ebay	7.67	Disney.com	6.72
Bluemountain.com	6.15	Ebay	6.72
Etoys	4.86	Amazon.com	6.40
Disney.com	4.66	Egghead.com	5.82
CDnow.com	3.42	Musicblvd.com	3.90
Sony.com	3.35	Barnesandnoble.com	3.72
Spree.com	2.97	Sony.com	2.96
Barnesandnoble.com	2.77	Netmarket.com	2.90
Columbiahouse.com	2.67	Etoys.com	2.64
Netmarket.com	2.56	CDnow.com	2.47
Musicblvd.com	2.49	Egreetings.com	2.45
Egghead.com	2.47	Mavys.com	2.27
Beyond.com	2.29	Columbiahouse.com	1.99
Wal-Mart.com	2.08	Ubid.com	1.82
** Reach is the percentage of the total number of Web surfers who visit a specific site

Category Percent Reach During Holiday Shopping
	Week
Category	11/20	11/27	12/4	12/11	12/18
Apparel	2.27	2.12	1.71	2.85	0.94
Auction	10.21	12.21	10.95	10.64	10.88
Books/CDs	14.78	16.39	17.35	16.44	15.88
Computer Products	11.25	11.93	11.30	11.16	12.93
Dept. Stores	3.02	3.76	3.39	4.13	3.75
Electronics	3.27	3.69	3.50	3.11	3.32
Entertainment	6.14	7.99	9.84	8.44	8.82
Shopping Networks	5.96	7.51	6.61	6.29	6.18

How long is the average shopping experince
Category	Time online at a specific site
Apparel	11
Auction	70
Books/CDs	13
Computer Products	12
Department Store	7
Electronics	28
Entertainment	9
Shopping Network	14
Specialty	14
Toys	10

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C Prompt The 1999 Internet Report

The Ten Lessons of 1998:

Basic Internet statistics:

Top Ten Internet Sites

Average amount of time spend on line per week