(Dulles, VA; November 25, 2002; Business Wire) 86% of Surveyed Internet Users Shop Online Monthly; Most of Those Say They Will Spend More Online This Holiday Season

Despite the proximity of renowned brick and mortar stores like Gump's or Macy's, cosmopolitan shoppers in San Francisco and New York turn to the Internet more than consumers anywhere else in the country, according to America Online's first-ever "Online Shopping Cities" report, a national online survey of nearly 7,000 respondents (adults 18+) conducted by Digital Marketing Services, Inc. (DMS).

The survey's ranking of the biggest online shopping cities reveals that e-commerce is a vital part of the retail world -- and the large coastal cities that dominate the offline retail world also lead the pack online. And Sacramento, representing the growing economic muscle and online savvy of America's mid-sized cities, has also broken into the online shopping big leagues by landing in third place in the survey.

The new survey also reveals that online shopping has increasingly become both mainstream and multichannel, as 86% of Internet consumers surveyed say they research or purchase products or services online at least once a month. More than 6 in 10 online shoppers say they will buy more online this holiday season than last year.

The Online Shopping Cities survey examined regional shopping patterns based on average number of times consumers research or purchase products and services online per month, along with the average dollar amount spent online for products and services per month. The top 10 cities were:

Market                    Avg. Times      Avg. Times        Avg.
                          Researches      Purchases        Spending
   
1. San Francisco, CA          24.6           5.2            $225.20
2. New York, NY               24.9           5.2            $221.10
3. Sacramento, CA             21.6           4.9            $216.50
4. Los Angeles, CA            18.2           3.9            $225.60
5. Boston, MA                 23.1           4.1            $197.30
6. San Diego, CA              26.0           3.8            $208.70
7. Seattle, WA                24.6           3.5            $280.30
8. Portland, OR               24.2           3.3            $249.50
9. Baltimore, MD              21.5           6.2            $185.10
10. Washington, DC            20.7           6.0            $200.20

The survey also found that:

* In a typical month, online shoppers spend almost $200;

* Online shoppers are buying for themselves 57% of the time, and purchasing gifts for family and friends the other 43%;

* Younger online shoppers (ages 18-19) spend an average of $136 per product purchase as opposed to their older counterparts (ages 50+) who spend an average of $111;

* Nearly all online shoppers say they do most of their shopping from home, not work (95% vs. 5%).

 "Every year, millions more people in more places across the country -- from coast-to-coast and everywhere in-between -- are making online shopping a habit and spending more," said Patrick Gates, Senior Vice President of Commerce at America Online, Inc. "From Fifth Avenue and Union Square to Main Street USA, shoppers across the country are increasingly turning to the Internet for the variety, value, time savings and convenience that it offers. And in a weak holiday season, the growing trend toward multichannel shopping is expected to provide life support for brick-and-mortar retailers by driving traffic to stores."

Online Holiday Spending Expected to Grow

According to the survey, online holiday spending is expected to increase, even against the backdrop of sputtering retail spending and the threat of war. A full 64% say that they will spend more money online this year than they did last year, with shoppers expecting to spend an average of $298 online this holiday season. And among those survey respondents who do not typically purchase products or services online in a typical month, 41% indicated that they plan to make online holiday purchases.

The Online Shopping Cities Survey also examined regional online spending projections for the holidays, and found that even though San Francisco continues to hold the number one spot, other cities include:

Market                     Avg. Expected Online Holiday Spending
   
1. San Francisco, CA           $399.20
2. Nashville, TN               $381.40
3. Miami, FL                   $352.50
4. Philadelphia, PA            $349.00
5. Sacramento, CA              $340.70
6. Baltimore, MD               $335.70
7. New York, NY                $334.50
8. Pittsburgh, PA              $332.50
9. Boston, MA                  $329.60
10. Los Angeles, CA            $325.10

The survey revealed that online shoppers expect to buy an average of 10 gifts online this holiday season, with the Music/Videos category leading the charge (53% of survey respondents plan to buy in this category). Other category leaders include Books (49%), Apparel (46%), Toys (38%), Computer Software/Games (34%), Gift Certificates (30%), Consumer Electronics (27%), Travel Services (26%), Health/Beauty (23%), Flowers (21%), Computer Hardware (20%), Jewelry (20%), Sporting Goods (18%), Home/Garden (17%), and Food/Beverage (15%). (Note -- respondents were asked to identify all categories they expect to purchase in over the holidays.)

Of these online holiday purchases, respondents indicated that 62% would be for children, compared to 48% for friends and 39% for themselves (includes buying for multiple recipients).

"In what's proving to be a relatively slow growth year for retail overall, online sales are continuing to gain momentum heading into the critical holiday period," Gates added. "With fewer shopping days between Thanksgiving and Christmas making time even tighter in the hectic holiday season, the ability to search thousands of sites in seconds for the right gift, have presents wrapped and shipped directly to friends and family, send instant gift certificates via email and engage in other last-minute buying online will certainly add to the appeal."

Holiday Shopping Profiles, Preparedness, and Gender Tendencies

When asked about their holiday online shopping personalities, 42% of online shoppers surveyed identified themselves as Bargain Hunters. Those who consider themselves Researchers (22%) do their investigative work online before making purchases offline. Other online shopping personalities include Searchers (14%), Brand Shoppers (10%), Promotion Finders (9%), and Procrastinators (3%).

On the holiday preparedness front, the majority of online shoppers claim they do most of their holiday shopping between Thanksgiving and Christmas (56%), compared to 27% that say they buy gifts throughout the year and keep them in the gift drawer. Belated holiday gifts also come from the 3% who wait to do their shopping until after Christmas to take advantage of post-holiday sales

The survey also uncovered some interesting trends along gender lines for online shoppers. Whereas respondents said 42% of their online holiday shopping would be for their spouse, significantly more husbands than wives intend to buy gifts online for their spouse (50% vs. 38%). Additionally the study found that, on average, men spend $50 more than woman in a typical month, and for the holidays, they're significantly more likely to cram all their shopping in the week prior to Christmas than women (13% vs. 7%).

Methodology:

This survey was conducted from August 28 - September 30, 2002 through OpinionPlace, an online research site operated by DMS. Opinion Place utilizes real-time, randomized assignment of respondents to surveys based on a scientifically proven process. A total of 6,976 respondents were interviewed, including both online browsers/purchasers and non-browsers/purchasers. The screening qualifications for this study were males and females aged 18 and above who research/browse or purchase products or services online at least once a month. The ranking for the top wired shopping cities was based on online browsers/purchasers and non-browsers/purchasers while all other survey questions were asked of only those who browse/purchase online.

About AOL Shopping:

One of the Web's most popular shopping destinations, AOL Shopping delivers the easiest, most convenient and dynamic shopping experience available in cyberspace. AOL's consumer-friendly shopping experience brings together millions of name brand products, state-of-the-art shopping tools and features, and a simple interface, all in one easy-to-use shopping destination. Designed for both first-time and experienced online shoppers, AOL Shopping is available to AOL members at Keyword: Shopping, CompuServe members at CompuServe Shopping, and to visitors through the Web at aol.com/shopping, compuserve.com/shopping, Netscape Shopping and ICQ Shopping.

About America Online, Inc.

America Online, Inc. is a wholly owned subsidiary of AOL Time Warner, Inc. (NYSE: AOL - News). Based in Dulles, Virginia, America Online is the world's leader in interactive services, Web brands, Internet technologies and e-commerce services.