U.S. Online Consumer Sales Surge to $53 Billion in 2001, comScore Reports

Reston, VA January 16, 2002 comScore Networks today announced the results of the first complete review of consumer e-commerce for the year 2001, reporting that sales at domestic online retailers surged to $53 billion for the year.  Excluding online Travel, comScore reports sales totaled $33.7 billion, reflecting a growth rate of approximately 20% vs. the year 2000.

While in some ways the trend in online sales mirrored that seen in total retail, there were some notable exceptions.  Signs of mid-year softness in non-Travel sales were offset by what was at the time a strong period of growth in the online Travel sector. 

Annual Overview: Total Industry
Following September 11 (and the American Airlines crash of November 12), and as the holidays approached, the Travel sector entered a slump from which it has recovered; at the same time, the Internet became a channel of choice for consumers who sought to defend their quality of life and their budgets with the convenience and price comparison benefits that the Internet offers.

Table 1: Online Consumer Sales at U.S. Sites (excluding Auctions)

($ millions)	1Q01	2Q01	3Q01	4Q01	2001 Total
Total	$ 11,482	$  12,477	$  13,300	$  15,807	$  53,066
Non-Travel	$  7,755	$   7,585	$   7,565	$  10,804	$  33,709
Travel	$  3,727	$   4,892	$   5,735	$   5,003	$  19,357

"In July and August, online Travel sales reached a fever pitch, fueled by consumer comfort with buying online, deep price discounts, and new choices in online agencies," noted Dan Hess, comScore vice president.  "But after September 11^th, the sector's sales fell dramatically, before beginning a slow recovery.  However, comScore data for the first two weeks of January 2002 show a strong resurgence in online travel spending. Needless to say, we'll be closely watching the category going forward."

Table 2: Percent of Year 2001 Online Consumer Dollar Sales by Month (excluding Auctions)

% of FY 2001 Sales	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
TOTAL	7%	7%	8%	7%	8%	8%	9%	9%	7%	8%	10%	12%
Non-Travel	7%	8%	8%	7%	8%	8%	8%	8%	7%	8%	10%	14%
Travel	6%	7%	6%	7%	9%	9%	11%	11%	7%	9%	9%	8%

Noteworthy Days of 2001
As the Internet came into its own as a vibrant shopping venue, comScore's analysis highlighted key dates and statistics of interest throughout the year.

The highest sales day of the year was Wednesday, December 12^th the height of the holiday season which posted $321.6 million for the day.  The lowest sales day of the year was January 1^st. Online sales on weekend days are generally lower than on weekdays (when many shoppers are able to use the high speed Internet connections at their place of work) and three-day weekends generally extend that same pattern, explained Mr. Hess.

The strongest weekend of the year also occurred during the holidays: December 15-16 rang up $341.1 million in sales a level 132% greater than the average weekend.  Not surprisingly, the lowest weekend sales were posted over September 15-16, as the wake of the September 11^th tragedies was felt in every corner of society and industry.

The average weekend day brings $97 million in sales, but average weekday (Monday-Friday) is a full 60% greater at $155 million, due to increased shopping activity at work-based PCs.

Leading Online Categories
comScore data show that at its third quarter peak, Travel accounted for over 40% of online sales; however, it finished the fourth quarter with the same 32% share at which it opened the year. 

Computer Hardware and Consumer Electronics were the hot products of the holidays; together these categories started the year at 19% of total sales and ended 2001 accounting for 24%.

"The trends we've seen in Travel, Computers and Consumer Electronics are consistent with more recent reports of overall strength in these sectors at retail," said Gian Fulgoni, comScore chairman and co-founder, "though the trends were clear in comScore's online shopping data several weeks before any retail measures were available."

Table 3: Share of Total Online Sales by Category

Category	Q1 2001	Q2 2001	Q3 2001	Q4 2001	FY 2001
Travel	32%	39%	43%	32%	36%
Computer Hardware	14%	12%	15%	17%	15%
Apparel & Accessories	11%	9%	8%	11%	10%
Office	11%	7%	7%	7%	8%
Consumer Electronics	5%	6%	5%	7%	6%
Books	5%	4%	4%	4%	4%
Event Tickets	2%	4%	3%	2%	3%
Home & Garden	2%	2%	3%	3%	2%
Music	2%	2%	1%	2%	2%
Health & Beauty	2%	2%	2%	2%	2%
All Other Categories	14%	13%	9%	13%	12%
Total	100%	100%	100%	100%	100%

Online Buying Data Predicts Industry Performance
One noteworthy contrast to the Computer industry's positive results is Gateway Inc. (NYSE: GTW), which recently reported a significant revenue shortfall.  However, comScore data identified this trend well in advance of Gateway's report.  comScore chairman Fulgoni commented that "Gateway's announcement came as  no real surprise to us,  since we had seen their online sales declining despite substantial growth in traffic to Gateway's Web site. It would appear that competitive pricing pressures were at the root of their problem."

"Similarly," continued Mr. Fulgoni, "comScore data clearly illustrated the surprise softness reported by booksellers in the month of September.  Again, this underscores the utility of comScore data as a leading indicator of company and sector performance."

Table 4: comScore Online Book Sales by Month – Year 2001 ($ millions)

Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
$204	$180	$199	$160	$172	$154	$152	$171	$164	$189	$189	$233

Brisk Purchase Activity Continues From U.S. Work Machines
Past comScore research was reinforced by the finding that work-based PCs , which comprise less than half of U.S. computers, actually drive almost 60% of U.S. online dollars, with an even greater skew within certain categories (see Table 5).

Table 5: Top Categories Based on Share of U.S. Category Dollars Purchased from U.S. at-Work PCs – (2001)

Category	Share of U.S. Category Dollars Purchased from U.S. at-Work PCs
Office	92%
Travel	62%
Flowers & Gifts	58%
Computer Hardware	57%
Books	55%
Computer Software	54%
Consumer Electronics	54%
Jewelry & Watches	53%
Home & Garden	49%
Event Tickets	48%

Armed with the increased speed and convenience of a workplace Internet connection, U.S. online shoppers at work-based PCs buy more often than those at other locations such as Home, Work or Universities.  They also spend the most on average per month, followed (in order) by buyers at Home, in Universities/Colleges and non-U.S. buyers. 

Table 6: Average Monthly Dollars Spent per Buyer by Location (2001)

Location	Average Monthly Dollars Spent per Buyer
US Work	$ 229
US Home	$ 165
US School	$ 146
Non-U.S.	$ 128

comScore analysts noted that these findings underscore the importance of targeting advertising and promotional efforts to shoppers when they are at the true point of purchase, research and decision-making.

International Sales at U.S. Sites
comScore's report revealed for the first time that 15% of total dollar sales at U.S. e-commerce sites are to Web users residing outside of the U.S.  "For retailers of categories in which International sales drive substantial revenue, this presents noteworthy opportunities and considerations in marketing strategy and product mix, driven by a more detailed understanding of worldwide category consumers," noted Mr. Hess.

Table 7: Top Categories Based on Share of Total Category Dollars Purchased from Non-U.S. PCs *U.S. Web Sites Only (2001)

Category	Share of Total Category Dollars Purchased from Non-U.S. PCs (U.S. Web Sites Only)
Movies & Video	34%
Computer Software	30%
Music	26%
Furniture & Appliances	20%
Books	19%
Jewelry & Watches	18%
Video Games	17%
Gift Certificates & Coupons	16%
Consumer Electronics	14%
Travel	12%

Demographic Highlights

An analysis conducted on November 2001 comScore data found significant differences in online buying patterns across key demographic segments.  For example:

• Residents of the Northeast U.S. spend more overall, driven by more frequent buying.
• A greater percentage of broadband users buy online vs. dialup users.  These users spend 14% more per buyer, and buy more often.  Broadband users constitute 38% of visitors but half of dollars.  (Note: includes home and work users.)
• College Graduates and Post-Graduate degree holders constitute only 24% of visitors, but spend 32% of U.S. online dollars.
• Single-family and smaller households spend more on average vs. larger households.
• Families in which the age of the head of household is 45-54 spend the most per buyer, at 7% above average.
• The percent of Americans age 65+ who buy online is about on par vs. the total population, but these older online shoppers buy less often and spend less when they do.
• Households earning $75K+ per year comprise 33% of the U.S. population, but spend 43% of total U.S. online dollars.
• A smaller percentage of U.S. Hispanics buy online vs. the total population, but those Hispanics that do shop online spend 7% more than average when they do.
• Asian Americans spend more per buyer than any other group.

comScore Methodology
comScore's sales figures are based on the actual buying activity of a representative and massive cross-section of more than 1.5 million Internet-using individuals, who have given comScore permission to confidentially monitor their browsing and buying behavior using comScore's patent-pending technology. The comScore data are available within 24 to 48 hours following the end of the time period being monitored.

comScore's passive monitoring approach has been acknowledged by research experts to be significantly more precise than that used by other market research firms, which are inevitably based on self-reported behavior among surveyed consumers sometimes only several hundred in number.  This research approach is problematic, both because it requires consumers to remember the complete details of every purchase which few people are able to do and because the small measurement sample yields a very small number of purchases from which to develop projections.

"comScore has created a powerful database to measure purchasing behavior on the Internet.  comScore's large sample size and ability to monitor the behavior of that sample are unique," stated Dr. Steven N. Kaplan, Neubauer Family Professor of Entrepreneurship and Finance at the University of Chicago Graduate School of Business.

"Because the data are collected automatically and passively, comScore's database avoids the inaccuracies of self-reporting," continued Professor Kaplan.  "With its large sample size, comScore is in a superior position to address and avoid selection biases that render many surveys and panels unreliable.  Finally, the granularity and flexibility of the comScore database have the potential to uncover purchasing behaviors and relationships that would not be discernible in smaller, less detailed samples."

Note: comScore's estimate of non-Travel sales growth vs. 2000 is based on a comparison of comScore Networks data for FY2001 to the U.S. Department of Commerce estimate for FY2000, adjusted for differences in categories (e.g. Dept of Commerce excludes Event Tickets but includes Auction Fees).

About comScore Networks
comScore Networks provides the Internet E-conomy with data-based infrastructure services that help improve sales and marketing effectiveness.  Through its patent-pending Customer Knowledge Platform, comScore provides a confidentially captured, 360-degree view of the surfing behavior of more than 1.5 million opt-in Internet users, while simultaneously capturing detailed information on their online and offline buying.  By leveraging this superior customer knowledge, comScore clients can optimize their decision-making and fuel high-performance, multi-channel CRM solutions.  comScore's suite of services including netScore, comScore Global Network Solutions, and comScore Private Network Solutions -- provides enterprises with a detailed understanding of the surfing and buying behavior of today's online consumers including what they buy, how often, where, and how much they spend.  comScore services are used by global leaders such as Microsoft, Kraft, Johnson & Johnson, Starwood Hotels and Resorts, GlaxoSmithKline, Hyatt Hotels, Dell, and AT&T.  For more information, please visit www.comscore.com and www.netscoreonline.com.