NPD PREDICTS GROWTH FOR E-TAILERS IN GROCERY, PRESCRIPTION MEDICINE AND TRAVEL

New Quarterly Study Predicts e-Commerce Trends and Opportunities

PORT WASHINGTON, NEW YORK, May 23, 2000 - E-tailers in the grocery, prescription medicine, and travel categories may be poised for the greatest gains in customers and sales during the next several months, according to a new study by leading marketing information provider The NPD Group, Inc. According to the firm, each category has been experiencing increases in current penetration (number of persons currently buying the category online), and consumers indicate that these categories will continue to increase for the next three months. The NPD research covers past purchasing for February through April, 2000 and future purchase intent for May through July, 2000.

In comparing fifteen product and service categories tracked across dimensions of current penetration and expected future purchasing, four categories emerged as high for both penetration and future purchasing: books / music / CDs; travel; auctions; and health and beauty aids. These categories are already popular with consumers and should continue to sell briskly as consumers indicate that they are likely to repurchase these categories in the second quarter.

Three categories emerged with low current penetration, but high expected future purchasing: grocery; prescription medication; and financial services. These less-developed categories have strong growth opportunities. Compared to the other categories tracked, online shoppers in these categories indicated that they especially intend to repurchase over the next several months.

Penetration gains over the past three months were 15% for grocery and prescription medicine and 10% for travel. These categories are not strongly affected by seasonality issues. NPD predicts the trend will continue with significant increases in penetration over the next quarter for all three categories: grocery, prescription medicine and travel.

NPD estimates that online grocery sales reached about $260 million during the three months ending in April. About 9% of all consumers who bought anything over the Web bought groceries online during that period. Compared to other online categories, the grocery category is less well developed but has shown steady growth since January, when NPD started tracking for this study. Online grocery purchasers also registered the highest expected future purchasing intention when compared with other categories. Among past-three-month online grocery purchasers, 40% bought only once, 40% two to three times, and 20% four or more times.

According to the NPD study, online grocery purchasers are more likely also to purchase health and beauty aids, office supplies, flowers/gifts and prescription medicines online than they are likely to make an online purchase in the other eleven categories. Compared to average online purchasers, online grocery purchasers typically are wealthier, in their middle age, female, more educated and tend to live in the Northeast and South regions of the country.

Online sales for all fifteen categories for the three months ending in April totaled approximately $10 billion. About 7% of online purchasers accounted for 50% of all online sales. The average online purchaser made just over two purchases and spent $360 during those three months.

NPD’s e-Commerce overview was conducted in April, based on responses from 5,000 individuals who made at least one purchase online within the previous three-month period. The sample is drawn from NPD's prerecruited Online Panel, which is balanced to be representative of the Internet population as defined by Media Metrix.

Respondents are polled every quarter regarding their online purchasing behavior at specific Websites in the previous three months and anticipated online purchasing during the next three months for 15 product and service categories. This information is matched with the monthly NPD e-Conomy^sm indicator to provide a clearer picture of consumer attitudes and behavior in the new economy.