NPD E-CONOMY INDICATOR CONTINUES TO DROP IN JUNE

Future confidence drops as number of online purchasers goes down

Press Release - July 5, 2000

The NPD e-Conomy Indicator continued to decline, dropping 4.5 points from the May level to 89.4 in June. The primary driver of the decline in the Indicator was consumers online purchasing. The consumer online purchasing index dropped from 84 to 77.8, while consumer confidence dropped 2.8 points. The monthly economic indicator integrates both consumer confidence and online purchasing behavior by surveying a representative sample of the online population to provide a monitor for the economy.

NPD reports consumer attitudes toward the future economy and future job market significantly declined in June, dropping 7.9 points to 98.9, the lowest level since the start of tracking in January 2000. The Indicator confirms results of the Consumer Confidence Index, released earlier this week, which reported a falloff in consumer confidence. However, the decline was slightly offset by consumer confidence in the present economy and job market, which has remained largely unchanged during this year.

"These results arent encouraging to the B-to-C market. Since early in the year, consumers have definitely backed off some in their support of the new economy. We see it both in their attitudes and in their behavior," stated Karl Irons, NPDs president of online research.

The number of consumers who purchased goods or services online has declined steadily throughout the year. The decline is due, in part, to the seasonal patterns of the new economy represented by the categories that were tracked. Both the current and future planned purchasing continued downward to their lowest level in the six months measured.

Most of the 15 B-to-C categories tracked by the Indicator show little growth or decline in penetration, or number of persons purchasing online, during the past three months. Some of these declines are due to seasonality, such as the post-Mothers Day dropoff in purchasers in the gifts and flowers category. On a more positive note, two categories bucked the trend and showed increases in penetration during June. The number of purchasers at prescription medication sites were up 10%; and the number of purchasers at travel sites grew 4% .

Methodology
The NPD e-Conomy Indicator is the only standard economic indicator that continuously tracks trends in the U.S. business-to-consumer (B-to-C) Internet economy.

To create the Indicator, each month NPD surveys 5000 consumers with Internet access. The sample is drawn from NPD's prerecruited Online Panel, which is balanced to be representative of the Internet population as defined by Media Metrix.

Respondents are polled regarding their confidence in their local job market, the overall economy and their family's financial situation relative to three months ago and three months into the future. Participants are also asked to report their online purchasing behavior in the past three months and anticipated online purchasing during the next three months for 15 product and service categories.

Combining the two components creates the complete NPD e-Conomy Indicator.

About The NPD Group, Inc.
The NPD Group is an international marketing information company headquartered in Port Washington, NY. Founded in 1953, the firm specializes in providing insight into consumer purchasing and behavior via both Internet-based and traditional research methodologies, including online and offline consumer panels and point-of-sale tracking.

NPD offers proprietary databases and research expertise in more than 20 industries, including apparel, automotive products, consumer electronics, cosmetics and fragrances, financial services, food, foodservice, footwear, housewares, information technology, interactive entertainment, new media, pharmaceuticals, toys, and more. The firm also offers a full range of analytical tools for ad hoc research. NPD is the developer of the revolutionary Web audience measurement technology now marketed by its successful spin-off Media Metrix, Inc. NPD has offices and affiliations in 36 countries, covering North America, South America, Europe, Asia and Australia. For more information on NPD, visit http://www.npd.com.

Copyright 2000, NPD, from a distributed press release.

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