Here's a look at how the shoppers on the Web are quickly becoming representative of the population as a whole.
Right now, on-line shoppers are young, male, and well-off. But the Internet is quickly becoming a market for the masses
If you think the World Wide Web is gigantic, overhyped, and dominated by young men, you're right. The typical Web surfer is male, about 33 years old, well-educated, and affluent. But if, based on these statistics, you decide not to spend precious marketing dollars to reach this slim portion of the general population, think again.
A snapshot of today's Internet user is inherently misleading because it obscures a crucial fact: the Internet is rapidly evolving into a mainstream medium. Experts say that by the year 2000, a little more than half of all U.S. homes will own at least one PC--and most of them will be jacked in to the Internet. Forrester Research Inc., a computer consulting and research firm in Cambridge, Mass., projects that more than 50 million people will be on-line by 2000. Others are less conservative. For example, e-land, an Internet market-research company that compiles Internet statistics from a number of sources, predicts that 142 million people worldwide (71 million in the United States) will have Internet access by the turn of the century. Some even claim that cable access could fuel an on-line rush that blows away even the most optimistic projections. For entrepreneurs who've already cracked the Web, that spells a massive marketing opportunity, as the world will soon be a mouse click away from all types of products and services.
Although the on-line community has yet to mature into its true size and shape, the seeds for a thriving electronic marketplace have already been planted. For starters, wealthy, educated individuals compose the sturdy base of Internet users. According to e-land, the Web user's median household income is $59,500, which is 65% higher than the median household income for the nation, and more than 30% of Web surfers earn upwards of $75,000 a year. According to PC-Meter, an Internet tracking service, more than one-third of the Internet audience has at least an undergraduate college degree.
So far, however, this pool of would-be shoppers has remained untapped. During the past year, as large and small companies sped to the Internet, most consumers remained reluctant to buy products on-line. Some industry analysts believe that Internet commerce will stay in its infancy until the public's lingering fears about transaction security have been quelled. In 1996, on-line sales yielded a modest $500 million to $750 million, a pittance when compared with the booming catalog and home-shopping industries, which together racked up a whopping $129 billion. In addition, several studies have shown that only 2.7 million of the 12 to 15 million people on-line have ever made a purchase in cyberspace.
But the number of Internet viewers has now reached critical mass, leading many analysts to expect unprecedented growth. For many companies, the Internet has already become an established method of communication, supplementing paper mail, phone calls, and even face-to-face visits. Soon Internet commerce won't be limited to a spate of daring enterprises; rather, it will become a critical distribution channel for the majority of successful enterprises. Booz, Allen & Hamilton, a management and technology consulting firm in McLean, Va., estimates that in 10 years, as much as 20% of all household expenditures will occur in cyberspace. And Forrester predicts that by the year 2000, on-line shopping will produce almost $6.6 billion in sales annually. "Now is the time to develop an on-line presence," says Kate Delhagen, an analyst at Forrester. "If you're not using the Internet today, you probably won't be in business in the 21st century."
Who Are They?
Before you can envision what might sell on-line in the coming years, you must first identify your future customers. Right now, baby boomers constitute 53% of those on-line, according to e-land. But most analysts depict a drastically different marketplace in just a few years. For example, young adults--especially those flannel-shirt-wearing 20-somethings known as Generation X-ers--make up one of the fastest growing segments of the on-line market. With few demands on their time and a parent's credit card in hand, these Generation X-ers could be your next customers. E-land reports that 12% of today's Internet users are between the ages of 18 and 24, and 22% are between 25 and 34. All told, more than 4 million 18-to-34-year-olds regularly surf the Web. Don't forget the 3 million children under age 18 who jump on-line every day from their homes and schools. By the year 2001, Forrester forecasts, nearly 33% of the on-line users will fall into the under-30 category.
For many on-line entrepreneurs, this means a crash course in learning to use dazzling technology to lure young viewers. Some suggest that cyber-businesses may even find it necessary to attract teens and 20-somethings who are unlikely to make purchases. It's not uncommon for companies to create a "premarket awareness" by giving the next generation of consumers a tantalizing peek at what's to come, explains Amelia Spiliotes, an Internet marketing expert and vice-president for on-line and health-management services at R.R. Donnelley Financial in New York, a business unit of R.R. Donnelley & Sons that provides communications-process solutions. In addition, some companies may have to cater to a variety of different age groups. "Younger people have no fear of technology, but that's not true of the rest of us," says Dan D'Heilly, a publisher and part-time lecturer for the Center for Entrepreneurial Studies at Babson College in Wellesley, Mass. "If you're going to run Java, it should be on a site aimed at the younger demographic."
The fast-paced growth of women on-line has also prompted industry analysts to take note. Many insist that the influx of women into cyberspace will greatly enhance the commercial opportunities for on-line entrepreneurs. Certainly, males will continue to dominate the Internet in the foreseeable future, but the gender gap in cyberspace is slowly shrinking. CyberAtlas, which tracks and compiles Web demographics, found that in 1996 about 32% of Internet users were women, up from 15% in prior years. In addition, Forrester estimates that by the year 2000, some 18 million women will be on-line.
With more women surfing the Internet, Web establishments will be forced to accommodate the computer habits of their female visitors. Recent studies have exposed vast differences between how women and men use the Internet. For example, Forrester says that women crave fast, easy access to information and that they have less patience for slow-loading "bells and whistles." According to Spiliotes, Web sites geared toward the women's market must also grasp why many women venture into cyberspace: to quickly obtain information on health, children, and parenting. "Right now, there are fairly limited reasons for women to go on-line," says Spiliotes.
The steady flow of women into cyberspace, however, has already sparked the growth of new on-line enterprises. In the past year, Women's Wire and Cybergrrl, two on-line magazines--or "zines"--for women, have reported some success. "Two years ago, it would have been too difficult to target a business to women," notes Forrester's Delhagen. "Two years from now, we might even see on-line businesses targeted at women over 50."
What Will They Buy?
If you listen to industry analysts, the tremendous increase in Web traffic will lead to an on-line shopping frenzy as more consumers become averse to traveling to malls and the Web becomes a safer environment for transactions. So what will everyone buy? In the short term, products that target a male audience and can be easily ordered and distributed over a wire will probably fare best in cyberspace.
For sure, on-line sales of computer products will continue to skyrocket. Most, if not all, software manufacturers already distribute at least demo versions and product upgrades via the Internet. Hardware producers are equally well-represented on-line, where they provide customers with purchasing information, operating manuals, and technical support. By 2000, Forrester estimates, consumers will purchase $2.1 billion worth of high-tech products through the Internet.
Other product categories should soon be raking in considerable cash, too. Given the unabated appetite for pornography by a prurient segment of the public, it's no real surprise that on-line entertainment in general, including CDs and books, will explode into a $1.25-billion industry by the turn of the century, according to Forrester. Travel services--purchased by both men and women--should also be a big winner. With the inception of electronic ticketing and open Web access to reservation systems, consumers already have the tools to research trips and reserve airline seats and hotel rooms. If trends continue, Forrester claims that on-line travel-related purchases will total $1.6 billion annually by the year 2000. On the other hand, products aimed at the women's market will lag behind. Apparel, for example, is expected to command a mere 5% of on-line dollars.
How Should You Proceed?
Even with the signs of fantastic future returns, don't expect it to be smooth sailing in cyberspace. For the majority of Internet users, Web surfing remains a frustrating and tedious experience. Most surfers still travel through cyberspace at a tortoise pace, forced to wade through an ever-increasing sea of digitized information. And, unfortunately, search engines have done little to assuage the situation. Because of the glut of on-line information, it remains difficult for many Web surfers to quickly locate desired resources.
The problems have led to some disheartening statistics. Consider, first, that most users visit fewer than 10 Web sites on a regular basis, according to e-land. That's a daunting number for businesses attempting to attract customers, given the estimated 300,000 to 500,000 registered domains--most of them commercial--that already exist. In the near future, it could get worse, as hordes of new sites populate the vast network. Some studies have even shown that the average Internet user spends less time on-line than he or she did a year ago. "The number-one obstacle for people is that they just don't have time," says Delhagen. "The flip side is that those who provide services that save time can offer a substantial value to the consumer."
Another sobering point: the rush of new users to the Web will quickly dilute the buying power of the well-educated audience members who have money to spend on your product. Some argue, however, that the median income for Internet users won't drop very much, because just to get on-line a household must be able to afford a computer. "Even with 52% PC penetration in the United States, those households will still be a cut or two above the typical lower-income household," says Delhagen.
Oddly enough, the greatest threats to small companies in cyberspace will probably be identical to the ones they face in the real world. For example, just as Wal-Mart and others have devastated Main Street businesses across the country, smaller on-line enterprises could soon get squeezed out by the giants. Indeed, the Internet is no longer an arcane tool for the savvy guerrilla marketer. Wal-Mart and its competitors have already begun to build massive on-line bazaars intended to lower operating costs and produce savings for the consumer.
Still, the Web levels the playing field for small companies because start-up costs are low. It may even favor smaller businesses, thanks to rapidly shifting demographics. With its steady stream of new consumers and constantly shifting "sweet spots," the Internet market is a perfect fit for small, fast-moving enterprises that can quickly readjust their focus and target fresh niches.
The lesson is clear: Small companies that wish to get a leg up on the competition must begin to stake out their territory in cyberspace and capitalize on millions of new users. E-land reports that at any given time, more than 50% of Internet users have been on-line for less than one year. These newcomers represent your future customers. Anticipate their needs today and reap the rewards in the next millennium.
Web demographics are constantly in a state of flux and can change from one on-line poll to the next. To find the latest statistics about who's on-line, check out any sites dedicated to tracking the Internet audience. Some firms actually collect the data through surveys and polls; others simply compile statistics from a variety of sources.
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