NextCard Adds Transactions to E-Tailer Rankings

NextCard Inc., the company that has attempted to make its name synonymous with credit cards on the Internet, is now trying to offer itself as a leading authority on Internet transaction volume.

For two years NextCard has published a monthly “eCommerce Index” on its Web site, ranking e-tailer sites by the number of transactions its cardholders make there. In June the San Francisco company added components to this feature, including a “Transaction Index” that compares the amount of each Internet purchase to the previous year’s average.

Normally, people seeking information on Internet transaction volumes would turn to a consulting firm or research organization that might track them -- not to a card issuer, since most of these do not make public any information about their customers’ spending habits. But NextCard apparently considers it a matter of self-interest to promote e-commerce in this way, and it boasts that its data are more accurate than others’ because they are drawn from real cardholder spending, not estimates or other indirect sources.

“In contrast to site traffic and visitor data, credit card transactions are a reliable way to measure where consumers are spending their money online,” said Scott Lascelles, group vice president of loyalty marketing at NextCard. “The new eCommerce Index reports on the most popular and fastest-growing online retailers based on actual credit card transactions. It also now measures consumer confidence in online shopping by tracking average purchase amounts month to month.”

NextCard’s indexes reflect transactions by its own base of one million cardholders, who might be more likely than the average customer to buy items through the Internet. The index, issued since May 1999, ranks Web sites by the number of NextCard holder transactions at those sites.

The most recent rankings, from May, put Amazon.com at the top and eBay.com in second place. Both companies have been on the chart for all 25 months it has existed. Half.com, another marketplace run by eBay, came in third in May, and was appearing in the rankings for the 13th month in a row.

Some companies, such as 1-800-Flowers, made a good showing in May, apparently because of Mother’s Day and graduation season.

In the first four months of 2001, NextCard purchasers spent less per transaction than they had spent on average last year. But the trend reversed itself in May, when Internet spending by NextCard Visa holders was up 7.5% from the average for 2000, largely because of gains by flower-selling Web sites.

NextCard spokeswoman Camille Lepre said the most noteworthy aspect of this list is that the same merchants tend to show up month after month. “For certain retailers to be on the list consistently is a testament to the fact that consumers enjoy the buying experience at those sites, more so than the others,” she said.

Though flower sites had the biggest bump in the May rankings, the retailer Amazon.com registered a higher transaction average during the month, indicating that nonspecialists also benefit from holiday shopping.

The consumer-trend tracker Bizrate.com of Marina Del Rey, Calif., says its own data, gathered from Internet shopper surveys, indicate a “softening” in e-commerce purchases during the second quarter, though the data are still preliminary.

It estimated first-quarter Internet spending at $10.7 billion, up 32% from the year earlier. Second-quarter spending may come in as low as $8.85 billion -- up from last year but down from the first quarter, despite the shopping spike prompted by Mother’s Day and graduation. Dragging down the average for the second quarter is a downturn in computer-related purchases, which make up as much as half of Internet retailer sales.

“The trend is softening,” said Juliane F. Hearst, general manager of research for Bizrate.com. The news is still good overall, she said. “There was so much hype in e-commerce at the beginning, but the pendulum is now swinging the other way,” and too much attention is being paid to the current downturn.

“Varying retailers have varying results,” Ms. Hearst said. “We see strong demand for e-commerce in general.” She cited a newspaper article that indicated Staples says 10% of its sales are now generated online.

BAIGlobal Inc., the Tarrytown, N.Y., market researcher, will soon release the results of its second annual TeleNation survey, which asked 1,000 U.S. adults about their Internet habits. The survey found that growing numbers of consumers are going online to make their first purchase. In February 2000, 27% of U.S. adults said they had gone online to buy. This year the share jumped to 41%, indicating growing interest, said Andrew Davidson, vice president of competitive tracking services.

Though more people are shopping online, they still express discomfort with security or privacy issues. Thirty-nine percent of the BAIGlobal respondents rated themselves not at all comfortable shopping on the Internet.

“We found that 10% of those who said they were not at all comfortable made a purchase anyway,” Mr. Davidson said. “Convenience or price is more important than security.”

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