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Online shoppers willing to buy from small eCommerce retailers

March 24, 2005

According to a recent survey sponsored by Hostway, for many Internet shoppers, company size doesn't matter, as most people are just as willing to buy from a small online retailer as a very large one.

The survey, conducted by market research firm TNS, surveyed 2,500 adult consumers nationwide. Of those surveyed, more than three fourths said company size was not a factor in having their online shopping needs satisfied, while only 15% of respondents said they preferred to shop with large retailers.

Jon Lee, vice president of Hostway, sees this as a great opportunity for small retailers online. "The promise of the Internet being a great equalizer still holds true," he said. Most notably, the Internet has become more affordable for small retailers to conduct business. "Because of the way the cost structure has changed--it used to be [financially] painful for small business to set up online--it allows for affordable experimentation," Lee said. "You can set up a site that sells just one item instead of a general store."

Lee is quick to point out, however, that even though size doesn't matter, important factors such as security and privacy do. Ninety-seven percent of consumers surveyed said assurance of security was important to them when shopping online. Ninety-six percent noted privacy, while prices, ease of use, and availability of desired products and services came in at 95%, 94%, and 94% respectively.

It seems the opportunities will be great for online retailers who can addresses consumers' concerns and needs this season. Not only is traffic to online retailers on the upswing, sales are, too. Online shopping on Black Friday (the day after Thanksgiving) jumped 11% compared to last, according the latest Nielsen/NetRating Holiday eShopping Index, which tracks shopping activity at 109 key retail and shopping sites across 10 categories. Black Friday saw the highest number of online shoppers, with 13.3 million more people visiting online stores than on the previous Friday, Nov. 19.

According to comScore Networks, a global information provider and consultancy on consumer behavior, online non-travel retail spending could top $15 billion this holiday season. This jump represents an increase of 23% and 26% over November and December of 2003. Thanksgiving day, Black Friday and Saturday all saw significant increases over last season--100%, 41% and 44% respectively--and sales during the full week ending Nov. 28 were $1.66 billion, an increase of 36% compared to the same week in 2003.

"[This past weekend was] big in comparison to last year," said Graham Mudd, senior analyst at comScore. But he's quick to note that the biggest online shopping day last year was December 9, and it remains to be seen if we will top that in online sales.

A big reason for the increase in online spending is the wider use of broadband connections. "In general people with broadband spend 50% more than narrow band counterparts," Mudd said. "In the last year, the use of broadband at home has skyrocketed and this has translated into buying online."


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