Sign in   |   Register

Good News for E-Commerce, but Shoppers Be Wary

  |     |   Bookmark    
Posted November 7, 2001 By Beth Cox     Feedback

Forrester Research says the online demographic will pull the industry through the economic downturn and eBay predicts a ho-ho holiday, but a consumer group warns of rising fraud on the Net.

There's good news for online merchants as yet more surveys predict a ho-ho-ho kind of holiday selling season. But it comes with a warning for consumers as another report says online rip-offs of shoppers are on the rise.

First the good news. Forrester Research said that regardless of whether an economic recovery is around the corner or a couple of years off, e-commerce will continue to grow.

The company's survey of nearly 9,000 online consumers on their buying habits revealed that e-commerce will grow through the downturn because the high income that most Web buyers have has thus far insulated them from the economic turmoil in the United States.

And auction giant eBay, meanwhile, released its own surveys showing that this year's overall holiday spending plans have not been seriously affected by the current economic conditions.

The bad news is from the National Consumers League's Internet Fraud Watch (IFW), which said that that in the first 10 months of this year, consumers have reported losses totaling $4.3 million, or $636 per person in Internet fraud. And auction scams continue to lead the list.

Forrester, meanwhile, contends that the shoppers most affected by the poor economy only make up 14 percent of online sales. Thirty-six percent of Web buyers are cautious, but at this time they have only decreased their household spending slightly, the company said.

About 48 percent of Web buyers are unconcerned about the economy; these consumers are relatively affluent compared with their counterparts, and, therefore, are more attractive customers, Forrester said. "They are not concerned that the current economic instability will affect them and are responsible for 52 percent of total online spending," the company said.

"The good news is that the 16 percent of online consumers who have already decreased their household spending only make up 14 percent of total Net sales," said Christopher M. Kelley, analyst at Forrester. "Demographically speaking, they are not the most prominent consumers because they have the least amount of money to spend."

Over at eBay, the surveys, designed by Michaels Opinion Research, were conducted Sept. 6-9 and Oct. 18-21, 2001. The first survey showed that 70 percent of adult Americans said they will spend the same or more than they did in 2000, while the remaining 30 percent said they will spend less on holiday gifts. For the second survey, after the events of Sept. 11, identical questions were asked, and results showed 71 percent expressing the intention to spend the same or more, with the remaining 29 percent saying they will spend less on holiday gifts this year.

Of course, who's to say, really? A prediction earlier this week flew in the face of research that has predicted a prosperous holiday season for online retailers. The study by Odyssey found online consumers becoming wary of e-commerce.

Perhaps for good reason, too. The Washington, DC-based National Consumers League said the $4.3 million fraud loss figure compares to $3.3 million and $427 per person for all of 2000. And those are just the "reported" losses. Lots of folks never bother to complain.

"Increases in loss coupled with predictions of less travel and more online shopping this holiday season make it more important than ever for consumers to understand how to avoid online scams and shopping mishaps," said Susan Grant, director of the Internet Fraud Watch (IFW).

Despite the increased use of credit cards to make purchases online, money orders are still the most common way Internet fraud victims paid for their products or services, the IFW said.

The league has released Six Tips for Shopping Safely Online to help consumers avoid scams and mishaps this holiday season.

Online auction sales remained the top Internet fraud for the first 10 months of 2001, though decreasing from 78 percent of the frauds reported to the IFW in 2000 to 63 percent in 2001.

Other top frauds for 2001, in order, are non-auction sales of general merchandise, Nigerian money offers (that one seems to have been sent 218 times to every person on the planet), Internet access services, Internet adult services, computer equipment/software, work-at-home scams, advance fee loans, credit card issuing scams and phony business opportunities.

"While auction complaints are the most numerous, consumers lose more money in some of the other Internet frauds such as general merchandise and computer hardware or software purchases," said Grant.

The consumer's league is a private, nonprofit membership organization.

Submit a Comment

Loading Comments...

Thanks for your registration, follow us on our social networks to keep up-to-date