According to PC Data Online, holiday spending online nearly doubled in 2000, while consumers were more satisfied with their experience. AOL members alone bought $4.6 billion worth of goods and services during the holidays, and $20 billion for the entire year.
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Those who pay only casual attention to such matters can be forgiven for thinking all Internet companies are fading away. With nary a positive headline in the last several months, most of the media's focus has been on the scores of dot-coms doubling over in pain, sucker-punched by investors who suddenly wanted to see good business plans and "clear paths to profitability." And rightfully so. The Internet crash of 2000 paved the way for the Nasdaq's worst year ever, as the index lost 39% of its value. But the Internet is not going away, and one only has to look at what happened the last couple of months as evidence. Despite some rough times for some -- eToys (Nasdaq: ETYS), for example -- most major Internet retailers did just fine during the 2000 holiday season. America Online (NYSE: AOL) members, for instance, spent about $4.6 billion online. Although officials did not say how much of that was funneled through AOL properties like Shop@AOL, they did say transactions processed through the service increased 100% over the last holiday season. According to a company press release, that figure accounted for about 70% of industry analysts' estimates of all consumer online spending for the holidays. PC Data Online, meanwhile, estimates at least $8.7 billion was spent online since the first week in November. For all of 2000, AOLers spent $20 billion online, double what they spent in 1999. On Christmas Day, AOL added 70,000 new members, 30% more than it signed up on that day the year before. And its growth has not been limited people unwrapping new computers on Christmas morning. On Dec. 10, the online giant had its third-best day ever of U.S. subscriber growth, adding 40,000 new members. Worldwide, AOL now has more than 26 million subscribers. The strong news is not limited to AOL. According to Nielson//NetRatings, Amazon.com (Nasdaq: AMZN) saw a 33% increase in shoppers over 1999. Traditional bricks-and-mortar companies, though still lagging far behind Amazon, saw even greater growth in total unique online shoppers. Toys "R" Us (NYSE: TOY), which partners with Amazon for toy sales, grew about 60%, while Wal-Mart (NYSE: WMT), Sears (NYSE: S), and Target (NYSE: TGT) -- starting with much smaller numbers -- saw triple-digit growth among their online visitors. AOL COO Bob Pittman couldn't help but take a swipe at traditional retailers: "We've posted another banner holiday shopping season for our merchant partners and for online consumers, and it's clearer than ever that online shopping is growing by leaps and bounds in a period where analyst estimates were that brick-and-mortar sales for the holiday period will increase only 2 - 2.5%." According to PC Data Online, holiday spending online nearly doubled 1999 levels, while consumers were more satisfied with their experience. Only 5% of respondents to a Goldman Sachs/PC Data poll said their experience was worse than 1999; 40% said it was better, 45% said it was about the same. While online spending is still growing strong, the pure-play Internet businesses are still falling hard. AOL's stock price has dropped to levels not seen in two years. Still awaiting final approval for the Time Warner (NYSE: TWX) merger, AOL shares closed out the year at $34.80, down 56% from their 52-week high of $80 on the first trading day of 2000. At $14, Amazon is 84% off its 52-week high. Although no one knows for sure if these stocks have hit bottom or if the Internet crash still has a ways to go, the trend is clear: Consumers will continue to spend more and more online and will have a better experience doing so.
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