Has Online Retail Spawned a New Orgy of Consumer Spending?
Shopnow.com captures the lure of e-commerce in its motto, “The shopping is 24 hours a day, seven days a week.” Indeed, online revenues, which last year totaled $4.5 billion globally, are expected to jump to $14.8 billion by next January. Two years after that, according to predictions, we’ll be shelling out $35 billion with a click of the mouse. It’s no wonder, since a million and a half new users log on to the Internet every month, 36 every minute, one every 1.67 seconds. Right now, 159 million people are logged on, and the International Data Corporation predicts that in four years the number will leap to more than 500 million.
“The educated computer users are slowly but surely being joined by the rest of society,” says Harry Wolhandler, vice-president of market research for ActivMedia. “The people coming online today are the hairdresser, the babysitter, the bagging people down at the grocery store—they’re everybody.” And they’re shopping. The eMarketer calculates that while today 14 percent of web surfers actually make purchases and 65 percent “shop around,” added security and ease of technology will boost those figures to 45 and 92 percent respectively by the year 2000.
This forecast has many online businesses going to great lengths for a bigger cut of the retail dollar. For instance, Gap clothier and outdoor gear guru REI have begun building Internet kiosks in their stores and hooking cashiers up to the web. Animated creatures dance on Disney’s cable TV channel, encouraging kids to go online. And BabyCenter.com is starting ‘em young by distributing educational pamphlets to 17,000 obstetric offices. Simba Information predicts advertising expenditures online will reach a staggering $5.5 billion this year, a 162 percent increase over the $2.1 billion spent in 1998.
Names like “Consumer World” and “Buy.com” illustrate perfectly the nagging concern e-commerce has raised in the minds of environmentalists. Bombarded with waving electronic banners and a constant barrage of ads, will online shoppers be able to resist a new orgy of consumer spending?
Navidec’s 1998 Cyber Shopper Survey revealed that, as a result of online shopping, respondents were already spending less time on household chores, sleeping, exercising, catching up on work, and with family and friends. They were, however, spending more time on the net, and purchasing more. “If you decide you want to buy something in traditional terms, you’ve got to get up and go find a store, pull out your checkbook and make a judgment,” says Betsy Taylor, executive director of the Center for a New American Dream, which supports the national voluntary simplicity movement. “But in this case, all you really have to do is push a button.”
The eMarketer calculates that credit card purchases accounted for 80 percent of Internet transactions last year, which creates very few barriers—physical or emotional—to impulse buying. “We’re still not there in terms of understanding the real environmental impacts of our consumerism,” Taylor says. “It’s not just what’s on the shelf, it’s not just what’s on your computer screen, it’s all the things that went into making the product, and it’s what happens to it when you’re finished with it.”
And as more and more customers succumb to convenience, “online shopping will almost certainly deal a major blow to local retailers,” says Michael Kinsley, who runs the Sustainable Community Development program at the Rocky Mountain Institute. That will be felt across the community through “loss of jobs, loss of character of the community and, more concretely, loss of the multiplier effect”—the principle that local businesses return several more times their profit to the community.
David Bolduc, owner of the Boulder Book Store and co-founder of the Boulder Independent Business Alliance, points out that “local businesses use local vendors, electricians, cabinet makers, even janitorial supplies.” They contribute to the tax base, add to cultural diversity and are often involved with nonprofit organizations. “But what your local business contributes back to the community may be number seven on the list of priorities for buyers,” Bolduc says.
This may explain why Amazon.com, now the third-largest bookseller in the U.S., registered over 6.2 million customers and totaled $610 million in book sales last year, a 313 percent increase over 1997. “The growth is coming from somewhere,” claims Bolduc. “These commercial Internet sites pour hundreds of millions of dollars into developing their sites.” He’s not far off. According to the New York Times, for every sale in 1998, online retailers spent $26 on marketing, while regular retail stores spent only $2.50. “We can’t possibly compete at that kind of level,” says Bolduc.
Of course, the same Internet attributes that lay a trap for overconsumption can also prove useful tools for the responsible business and consumer. On the web, it’s possible to comparison shop without driving from store to store, saving fuel and freeing leisure time. The Internet also provides consumers access to lesser-known environmentally-friendly products and geographically-isolated businesses. The EcoMall website, for instance, links to everything from vegetarian restaurants and organic diaper makers to sustainable home-building kits. The Center for a New American Dream will soon provide a forum for linking to green goods through its website as well.
One of the fastest-growing segments of online commerce is the auction house. There are now more than 150 electronic auction sites, giving internet shopping a new, and secondhand, direction. The world’s largest online trading community, eBay, attracts more than two million registered users, haggling for 1.5 million items in over 1,000 categories. With eBay, you can finally locate that Willie Mays commemorative $5 casino chip you’ve been searching for, or bid on an antique mandolin to round out your collection. But the site also allows consumers to locate bargains on everyday items like clothes, toys and home furnishings. Some veterans of online auctions, like Mary Ann Masarech of Fairfield, Connecticut, find it actually “encourages reuse by providing easy access to used merchandise.”
“But it will take a very conscious, responsible consumer to use the tools of the Internet for their own purposes, rather than being seduced into more shopping, more buying, more impulse,” cautions Taylor. “It will take greater consciousness than most of us now have.”