September is the month to start making end-of-year holiday plans. It is also a great time to make preparations to ride the US Hispanic e-commerce holiday wave.

This month’s inquiry examines the retail category traffic trends for US Hispanics, who are increasingly turning to the Internet for product information - as well as purchases.

• E-commerce sales (excluding travel):$86.3 billion in 2005;$104.9 billion in 2006;$125.1 billion in 2007 1.
• Online shoppers ages 14+: 117.9 million in 2005; 122.2 million in 2006; 126.3 million in 2007 2.

In the case of retail, click fuels brick. Year to year e-commerce growth is the engine fueling total retail sales. In 2005, total retail sales growth increased 7.2% of which retail e-commerce sales growth increased 24.6%. 3

Specific retail industry categories are experiencing the e-commerce gold rush more than others. Apparel and accessories, computer software (excluding pc games), and toys/hobbies retail categories garner 35% or more of their total retail sales from e-commerce.

Chart # 1:

Hispanic consumers are early adopters of new technology and the latest gadgets, and lead the rest in sophisticated online transactions. For example, 14% of Hispanic Internet users make financial transactions such as stock trades, mutual fund purchases versus 11% of non-Hispanic White Internet users. 4

This tendency to easily adapt to and embrace the latest technology helps explain why Hispanic consumers over-index in planned purchases during the holiday season. According to Chart #2, last year, the Hispanic consumer planned to spend $348 on electronics/computers gifts, outspending other ethnic groups in the same category (Whites $151/ and Blacks/$235). Note that US Hispanics also over-index in other e-commerce gift categories, such as Toys/Games, Travel, and Books/Music.

Chart # 2:

There are many reasons that explain the high US Hispanic out-of-pocket retail expense, such as their larger average household size of 3.6 versus the overall general market of 2.6. 5 Yet another reason is the formidable US Hispanic purchasing power, estimated to be $863.1 billion in 2007, an 8.1% increase over 2006. 6

Chart # 3:

As e-commerce is fueling the growth of retail overall, US Hispanics are the growth catalyst for overall buying power. In reference to Chart #3, Hispanic buying power is consistently increasing at a faster rate than non-Hispanic; Hispanic buying power is expected to increase 48% from 2005 to 2010 to over 1 trillion, while non-Hispanic buying power is forecast to increase only 29% during the same time period.

Retail, like many industries, is seasonal with its peak during the busy end of year holiday gift giving season. According to the National Retail Federation, one fifth of all retail sales occurred during the holiday season, with projected holiday retail sales of $457.4 billion. 7

Offline mirrors online, as US Hispanic unique visitors to retail sub categories, such as consumer electronics, increased in reach during the 2005 holiday season, clearly evident in Chart #4. For example, the books retail category subcategory increased 26% from Sept. 2005 to Dec. 2005.

Chart # 4: 8

The retail category subcategory of comparison shopping had also witnessed an increase in reach during Sept. 2005 to Jan. 2006, according to Chart #5, underlining the power of the Internet to research products and compare prices prior to purchase. Indeed, 72% of Hispanic Internet users go online for price comparisons, while 68% of Hispanic Internet users believe that the Internet is the best source for making final purchase decisions. 9

Given this tendency to comparison shop online, it’s no surprise that Terra’s Comparador de Precios engine (http://terra.pricegrabber.com/) is a popular spot for our audience. Our users can compare prices, shop and purchase items like computers, books, apparel and many more directly from the merchants’ sites in this B2C channel.

Marketers like Samsung are also taking advantage of the e-commerce holiday spending frenzy through their first US Hispanic online campaign for Samsung NV Series Digital Cameras on Terra.com. Timed to the beginning of the holiday shopping season, the Samsung campaign invites users to learn more about digital photography (FotoGenios, http://www.terra.com/samsung/) and offers information on the features of the Samsung NV Series Digital Cameras. Buyers can purchase this product online directly from their merchant sites.

Hispanic e-commerce behavior is not a “point in time” phenomenon around the holiday season, but rather an established trend, which is poised to grow. Among Spanish speaking Internet users, 54% have purchased online, and 45% believe their e-commerce spending will increase within the next year.

Chart # 5:

Be a Smart Marketer. Understand cyclical online trends such as retail holiday shopping and position upcoming campaigns accordingly. US Hispanics are prime consumers for your holiday shopping messages.

1. eMarketer. Comparative Estimates: US Retail E-Commerce Sales (excluding travel), 2004-2007 & 2010 (billions) note: eMarketer uses the US Department of Commerce figures for 2004 & 2005 as a baseline. April 2006

2. eMarketer. Online Shoppers Ages 14+ in the US, 2004 – 2009 (millions and % of Internet users ages 14+). April 2006

4. eMarketer. Select Online Finance Activities of US Internet Users, by Race/Ethnicity, 2005 (as a % of respondents in each group). Source: Yankelovich Monitor, September 2005

5. Synovate. U.S. Diversity Markets Report. 2006. page 31

6. Selig Center for Economic Growth. Hispanics will top all U.S. minority groups for purchasing power by 2007, according to annual buying power study from UGA’s Selig Center for Economic Growth. September 2005

7. eMarketer. US Holiday Retail Sales, 2005 & 2006 (billions and % increase vs. prior year). National Retail Federation. September 2006

8. comScore Media Metrix, US Hispanic Service, Retail Categories, % Reach Metric, Sept. 2005 – Jan. 2005. Analysis performed by Terra Networks USA.

9. eMarketer. Hispanic Internet Users Who Believe the Internet is the Best Source to Make Final Purchase Decisions on Brands or Products, 2005 & 2006 (% of respondents), Hispanic Internet Users Who Use the Internet to Compare Product Prices, 2004 & 2006 (% of respondents). Synovate for AOL Latino, September 2006. n=502

To learn more about how you can reach Terra.com's quality audience with your marketing message, call us at 212-354-2700. Visit http://www.terra.com/advertise/ and http://www.terra.com/terraenlaprensa/.

By Natasha Funk Published September 29, 2006. If you missed past issues of Terra’s Smart Marketer Series and would like to obtain them, please send an email to: smartmarketer@terra.com.