Is There a Digital Divide in Online Shopping?

by Bryant Ott, Senior Staff Writer

Online shoppers spent an average of $130

'Twas a few days before Christmas, and all through the house, not a creature was stirring, except for a mouse -- the computer mouse, that is. Consumers have spent the holiday shopping season buying gifts for stockings hung by the chimney with care, and according to many retail experts, they're doing an increasing amount of that buying online.

A mid-September Gallup Panel survey* asked respondents about their shopping habits and preferences, including where they purchase goods and how much money they spent at those retailers. While respondents are more likely to say they purchased goods from general merchandise stores, discount retailers, drug stores, and department stores, the percentage who purchased items online is higher than the percentage who purchased items at electronics stores or specialty apparel retailers. About 3 in 10 panelists say they purchased merchandise online or from an Internet-based retailer in the last 30 days.

Respondents' likelihood to say they have made online purchases increases with their reported household income. Panelists whose annual household incomes are $100,000 or more are more likely to say they've made online purchases than panelists with annual incomes of $35,000 or less, 48% to 16%, respectively. That income gap likely stems from lower-income households being less likely to own a computer, and therefore, less likely to be able to shop online.

How wide are panelists opening their virtual wallets when shopping online? Gallup asked panelists how much they spent during their most recent shopping trip to a variety of retailers.

There aren't big differences in the average amount of money online shoppers say they spent ($130) during their last visit and the average amount shoppers at electronics stores say they spent there ($166) and specialty apparel shoppers spent at specialty apparel retailers ($123). There is also little difference between the average dollars online shoppers spent and department store shoppers spent ($121) in the last month, even though respondents are more likely to say they've made purchases at department stores than online.

On average, online shoppers report a higher bill for their last visit than do general merchandise shoppers ($94 average) or discount store shoppers ($63 average).

Gallup retail industry expert Kurt Deneen says part of the reason people are spending more online is that they are buying bigger-ticket items. "Consumers are growing more comfortable making bigger-ticket purchases online," Deneen says. "As more products become available, it is convenient to make the purchase online; there's no hassle on price, and no need to fight crowds or deal with getting the product home."

It may also have something to do with who is doing the buying online. Panelists with higher incomes are the most likely to say they made purchases online; so online shoppers, presumably, can afford to spend more.

In or On?

Gallup also asked panelists how much they agree or disagree with the following statement: "I prefer to purchase inside the store, rather than online or by catalog." Fifty-one percent of respondents strongly agree.

"The current trends in shopping, especially in certain age groups, clearly show that browsing -- more than buying -- often occurs online," says Deneen. "Online sites can often be viewed as yesterday's catalogs, but with very modern bells and whistles. Consumers browse the catalog, but often make purchases in the store."

Household income seems to play a role in respondent preference to shop online. Panelists in lower-income households are more likely than those in higher-income households to strongly agree they prefer to purchase inside stores.

There is a strong and growing relationship between retailers' online and in-store presence, regardless of what kinds of goods they sell. "Consumer electronics customers often start their shopping in stores, to experience the product, and then they compare prices and perhaps make a purchase online," says Deneen. "The challenge for retailers is to capture that customer within all of their channels."

*These results are based on interviews with a sample of 1,043 adults in the Gallup Panel survey of households, conducted Sept. 10 to Sept. 22, 2005. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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