2005 On-line Holiday Spending--Direct Marketing, Mail Order, E-commerce News

Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association

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Online Holiday Shoppers Spent a Total of $30.1 Billion during 2005 Holiday Season,
Up 30 Percent from 2004, According to the eSpending Report from Goldman Sachs,
Nielsen//NetRatings and Harris Interactive

Apparel/Clothing, Computer Hardware/Peripherals and Consumer Electronics Captured
the Most Online Holiday Dollars This Year, Showing Double to Triple-Digit Year-over-Year
Growth; Record High in Shoppers Choosing to Buy Online vs. Other Channels

December 29, 2005 - The Goldman, Sachs & Co., Nielsen//NetRatings and Harris
Interactive® fifth annual Holiday eSpending Report revealed today that online holiday
shopping totaled $30.1 billion, excluding travel, during the 2005 holiday season
(October 29 - December 23). This season's online spending in the United States resulted
in a 30 percent increase (+/-3.1 percent margin of error) from the 2004 holiday season.

“Consumers continue to shop later in the online holiday season as their trust
in on-time delivery grows. While 2005 holiday sales appear to be at the high
end of expectations, continued heightened competition could hurt profitability,”
said Anthony Noto, Internet and entertainment analyst, Goldman Sachs.

According to the final Holiday eSpending Report for 2005, online shoppers spent
the most holiday dollars on apparel/clothing during the 2005 holiday season,
totaling $5.3 billion; the category enjoyed 42 percent growth from last year's
online revenue (see Table 1). Computer hardware/peripherals ranked second in
category spending with a total of $4.8 billion, showing a 126 percent year-over-year
growth in online revenue, the strongest growth this season.

Consumer electronics, the second fastest growing category, garnered $4.8 billion
in online spending, jumping 109 percent year-over-year. Books and toys/video
games rounded out the top five product categories, garnering $3.0 and $2.3 billion
in online revenue, respectively. The Books category jumped 66 percent in revenue
from last year, compared to toys/video games, which fell nine percent from the
2004 holiday season.

“Apparel remains one of the more dominant product categories during the holiday
season, mirroring offline holiday retail behavior,” said Heather Dougherty,
senior retail analyst, Nielsen//NetRatings. “Computer hardware and consumer
electronics had a stellar season with the price reductions for laptops, plasma
TVs, color printers as well as high demand for iPods, digital cameras, and media
accessories. The 2005 holiday season was a gadget year for consumers of all
ages, and consumers continued to show their love for free shipping.”

Dougherty continued, “Toys and video games were not as fortunate this year,
with a lack of the must-have toy to drive sales. Moreover, the line between
product categories are blurring with the introduction of more hybrid devices
that can be considered consumer electronics or computer hardware.”

Table 1: Online Shopping Categories Ranked by Projected Online Revenue, December 2005
+----------------------------------------+---------------------+----------+

| Product Category** | 2005 Projected | 2005 vs. |

| | Online Holiday | 2004 YOY |

| | Revenue in Millions | Growth |

+----------------------------------------+---------------------+----------+

| Apparel/Clothing | $ 5,349 | 42% |

| Computer hardware/peripherals | $ 4,821 | 126% |

| Consumer electronics | $ 4,793 | 109% |

| Books | $ 2,953 | 66% |

| Toys/Video games (hardware & software) | $ 2,296 | -9% |

+----------------------------------------+---------------------+----------+

Source: Goldman, Sachs, Nielsen//NetRatings, and Harris Interactive eSpending
Report, December 2005; the Holiday eSpending Report considers October 29 to
December 23, 2005 as the 2005 holiday season.
*Note: Number of respondents: More than 1,000 online U.S. adult consumers surveyed
weekly (Week 1-8: n=8,676)
**Note: The featured categories met a minimum reporting sample of 100 respondents.

Shifts in Online Holiday Shopping Behavior
During the 2005 holiday season, the fifth annual Holiday eSpending Report surveyed
more than 1,000 consumers a week to capture consumer spending habits, attitudes
and motivations, totaling more than 8,600 shoppers throughout the season. Through
the course of the last few years, consumers have been asked to break down their
holiday budget amongst various sales channels.

While traditional brick-and-mortar stores continued to hold the majority, or
68 percent of the 2005 holiday spending, it dropped 10 percentage points from
the 2002 holiday season, when consumers said they intended to conduct 78 percent
of their holiday spending in stores.

In contrast, the online sales channel rose 11 percentage points, garnering 27
percent of total budgets this year from 16 percent four years ago. Catalog buying
remained steady at five percent this year, compared to six percent in 2002.

"E-commerce is gaining ground amongst consumers during the holiday season due
to its convenience, product selection and lower prices. Most importantly, holiday
shoppers are diligent about finding the best price. The continued popularity
of search engines, such as Google and Yahoo!, highlights the ease of researching
product selection and availability, and with a longer shopping season, it was
much easier to wait for additional price reductions," continued Dougherty.

Table 2: Distribution of Holiday Spending, Aggregated Seasonal Average, December 2005
+-----------------------+------+------+------+------+---------------+

| Spending Distribution | 2005 | 2004 | 2003 | 2002 | 2002 vs. 2005 |

+-----------------------+------+------+------+------+---------------+

| Stores | 68% | 72% | 74% | 78% | -10% |

| Catalogs | 5% | 6% | 6% | 6% | -1% |

| Online | 27% | 22% | 20% | 16% | 11% |

+-----------------------+------+------+------+------+---------------+
Source: Goldman, Sachs, Nielsen//NetRatings, and Harris Interactive eSpending
Report, December 2005
*Note: Number of respondents: More than 1,000 online U.S. adult consumers surveyed
weekly (Week 1-8: n=8,676)

This holiday season, consumer satisfaction reached a peak with 64 percent of
shoppers noting they felt very or somewhat satisfied (see Table 3). Consumer
dissatisfaction hit a four-year low as only six percent of consumers cited they
were either very dissatisfied or somewhat dissatisfied.

Dougherty added, “The consistently high level of satisfaction each year increases
the future expectations for online sales. More consumers are taking advantage
of the benefits of e-commerce to avoid holiday crowds and purchase competitively
priced gifts. Many of the free shipping promotions help level the playing field
among the sales channels, which elevates satisfaction amongst online shoppers.”

Table 3: Consumer Satisfaction, Aggregated Seasonal Average, December 2005
+-----------------------+------+------+------+------+---------------+

| Satisfaction Level | 2005 | 2004 | 2003 | 2002 | 2002 vs. 2005 |

+-----------------------+------+------+------+------+---------------+

| Very satisfied | 40% | 37% | 40% | 37% | 3% |

| Somewhat satisfied | 24% | 24% | 23% | 22% | 2% |

| Neutral | 31% | 32% | 30% | 33% | -3% |

| Somewhat dissatisfied | 4% | 5% | 5% | 5% | -1% |

| Very dissatisfied | 2% | 3% | 3% | 3% | -1% |

+-----------------------+------+------+------+------+---------------+

Source: Goldman, Sachs, Nielsen//NetRatings, and Harris Interactive eSpending
Report, December 2005
*Note: Number of respondents: More than 1,000 online U.S. adult consumers surveyed
weekly (Week 1-8: n=8,676)

About the 2005 Holiday eSpending Report
The eSpending Report by Goldman Sachs, Nielsen//NetRatings and Harris Interactive
is based on a weekly national survey of more than 1,000 adult consumers from
among the Harris Interactive online panel of survey respondents who are randomly
invited to participate in online surveys. The survey began to field the week
of October 29. The week 8 data are based on responses from a sample of 1,153
U.S. adults who were online, fielded from December 17-23, 2005; totaling, over
8,600 consumers who have been surveyed during the 2005 holiday season. The 2005
holiday season data were weighted to be representative of the total U.S. online
population of adults, and in theory, with a probability sample of this size,
one can say with 95 percent certainty that the overall results have a sampling
error of +/-3.1 percentage points. Sampling error for sub-category results is
higher and varies. The eSpending Report offers weekly intelligence on online
shopping and spending by market segment and also tracks consumer attitudes and
motivations that drive online shopping.

About Goldman Sachs
Goldman Sachs is a leading global investment banking, securities and investment
management firm that provides a wide range of services worldwide to a substantial
and diversified client base that includes corporations, financial institutions,
governments and high net worth individuals. Founded in 1869, it is one of the
oldest and largest investment banking firms. The firm is headquartered in New
York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other
major financial centers around the world.

About Nielsen//NetRatings
NetRatings, Inc. (Nasdaq: NTRT) delivers leading Internet media and market research
solutions, marketed globally under the Nielsen//NetRatings brand. With high
quality, technology-driven products and services, Nielsen//NetRatings is the
global standard for Internet audience measurement and premier source for online
advertising intelligence, enabling clients to make informed business decisions
regarding their Internet and digital strategies. The Nielsen//NetRatings portfolio
includes panel-based and site-centric Internet audience measurement services,
online advertising intelligence, user lifestyle and demographic data, e-commerce
and transaction metrics, and custom data, research and analysis. For more information,
please visit www.nielsen-netratings.com.

About Harris Interactive®
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York, is the 13th largest and the fastest-growing market research firm in the
world, most widely known for The Harris Poll® and for its pioneering leadership
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