PORT WASHINGTON, NEW YORK, March 8, 2000– Online toy sales catapulted from $45 million in 1998 to $425 million in 1999, according to a new e-Visory Report released by leading marketing information provider The NPD Group, Inc. and Media Metrix (NASDAQ: MMXI), the pioneer and leader in Internet and Digital Media measurement. The report predicts online toy sales will reach $1.6 billion by 2002 if last year’s momentum continues.

According to NPD, online toy sales accounted for 2% of all 1999 toy sales, which totaled $23 billion. Dollar sales in the overall toy industry grew 8.6% over 1998, about a $2 billion increase for the year.

Despite well-publicized Website outages and slowdowns during the peak December selling season, NPD found consumer attitudes post-holiday to be positive, boding well for toy e-tailers. NPD Online Research data indicate that over 95% of consumers were satisfied, if not extremely happy, with online toy shopping experiences during the 1999 holiday season and would buy online in the future.

What’s more, toy e-tailers appear to have overcome many of consumers’ barriers to purchasing toys online. In a September 1999 NPD Online Research survey, 55% of respondents said a reason for deciding not to purchase toys online was an unwillingness to pay shipping costs. By January 2000, that number had dropped 23 points, to 32% of respondents.

Consumers’ desire to see in person the intended purchase item was a reason not to purchase toys online for 46% of respondents in September and for only 29% in January. This shift may be attributed to marketers’ increased attention to providing comprehensive product information.

Online return policies, which 25% of respondents cited as a reason for not buying toys online in September, were cited by half that number of consumers in January, a change which may be linked to an increase in click-and-mortar retailers permitting returns to physical stores.

“We’ve seen consumers’ confidence in e-commerce grow over the past year, much to toy e-tailers’ good fortune. In 2000 and beyond, they’ll have to continue to address technical issues and site maneuverability in order to support all of the customers they attracted during last year’s holiday shopping season. Consumers want speed and convenience. Those will be the big concerns going forward,” said Michael Redmond of NPD’s Toy Division.

The online toy category had 13.7 million unique visitors to dedicated toy merchandising sites in December 1999, up from 7.6 million in December 1998. Media Metrix ranked etoys.com, toysrus.com and kbkids.com the top three most frequently visited sites dedicated only to toy merchandising in December 1999. Etoys.com’s 5.8 million visitors, 59% of whom were engaged visitors, helped the site claim the top spot based on December traffic. Media Metrix defines an “engaged” shopper as one who views at least three minutes of content within a site. Engaged visits are key precursors to online sales, according to Media Metrix.

Of all sites marketing toys online, not just those only dedicated to toy sales, January 2000 NPD Online Research data show amazon.com, etoys and toysrus.com garnering the largest share of purchases.

Source: NPD Online Research September 1999 and January 2000