November 14, 2012
Cyber Monday Expected to Post Big Numbers in Online Consumer Savings
WASHINGTON, D.C. – November 16, 2012 – Broadband-enabled savings increased nearly $1,200 per American household from last year, the Internet Innovation Alliance (IIA) announced today. Savings for Internet-using U.S. consumers grew from 12.2% (or $7,694.56 annually) to 13.5% (or $8,870.00 annually), with the U.S. Bureau of Labor Statistics reporting that average annual expenditures rose 3.3 percent in 20111. The upswing in consumer spending was the first increase since the 1.7-percent rise from 2007 to 2008, as expenditures declined in 2009 and 2010. The IIA-identified cost savings – achieved by having access to and using high-speed Internet – are detailed in the 2012 financial analysis titled, “Next-Generation Networks and Top 10 Consumer Savings Now,” by Nicholas J. Delgado, certified financial planner and principal of Chicago-based wealth management firm Dignitas.
“On Cyber Monday, Americans will log on to take advantage of Internet-only discounts and offers like free shipping,” said Delgado. “But more and more consumers are realizing that the Internet is an essential ingredient for keeping more money in their pockets year-round with deals regularly available and many online retailers making value their central differentiator.”
According to new research from Forrester, 57 percent of online adults in the U.S. shop more with retailers that offer free shipping.
Smart shoppers use next-generation networks to save money through:
- Price comparison (and negotiation of better deals thanks to being educated about the price of a product according to multiple retailers online)
- Access to deeper inventory, often through sites that aggregate many different marketplaces
- Discounts and coupons found only on the web that can both be used online and in brick-and-mortar stores
- Sparing gas and the time burned by shopping in brick-and-mortar stores
“These money-saving tactics are critical in a challenging economy and are contingent upon access to high-speed broadband,” said Bruce Mehlman, founding co-chairman of the IIA. “Transitioning to next-generation networks is crucial for all Americans to be able to make the Internet part of their financial strategy.”
The analysis, based on the 2011 Consumer Expenditure Survey released on September 25, 2012 by the U.S. Department of Labor, is the third in the IIA’s Cost Campaign series. Factoring in the average annual cost of a home broadband connection – $4903 – the typical American family can save nearly $8,400 ($8,380.01) per year on necessities like housing, food and clothing; basics including entertainment and travel; and every day services like bill pay through opportunities only available via the Internet.
Of note, the percentage consumers can save by getting their news online dropped by more than four percent since 2011’s analysis, compared to the percentage of savings climbing or remaining steady in most categories. This is due to more publications charging for web content and rising online subscription costs. Interestingly, in its release of e-commerce numbers for the third quarter, comScore noted that “Digital Content & Subscriptions” was a top-performing online product category. 4
The following savings are based on the average U.S. household income before taxes of $63,685.
Top 10: Potential Annual Savings Garnered by Broadband Connectivity
Cyber Monday
Cyber Monday, which falls on November 26th this year, is expected to post big numbers, both in consumer savings and retail revenue. Third quarter e-commerce numbers from comScore show that online retail spending reached $41.9 billion for the quarter, up 15 percent versus a year ago. This is the twelfth consecutive quarter of positive year-over-year growth and eighth consecutive quarter of double-digit growth for online spending. Forrester predicts that this holiday season will generate $68.4 billion in online sales for the U.S. That’s three percent higher than the expected overall annual online retail growth rate. Forrester also estimates that holiday shoppers will spend an average of $419 online this year, a leap of 12 percent over last year.
“As with any spending, self-discipline is important,” said IIA Co-Chair Jamal Simmons. “With a little restraint, high-speed Internet can be a great tool for sticking to a budget.”
Simmons added, “Broadband is transforming our daily lives, allowing us to be more efficient and informed and putting better education, jobs, health care and financial decisions within reach.”