2003 Online Holiday Sales Should Have a Positive Impact on Annual Sales

Interland (Nasdaq: INLD), a leading provider of Web hosting and online services for small and medium-sized businesses, today announced the results of its 2003 Holiday E-commerce Survey. The nationwide study of small businesses with Web sites revealed the integral role an online presence serves, with 78 percent indicating their company benefits from having a Web site.

Overall, the study found that small and mid-size businesses' credibility, marketing and sales were the areas most positively impacted by having a Web site. Of those surveyed, 51 percent agreed with the statement that their Web site primarily provides company credibility, 33 percent said their Web site is their most powerful marketing tool, and 28 percent said they rely heavily on their Web site to make sales goals. Respondents also agreed that having a Web site provided a critical building block for developing products they sell (21 percent) and helped lower costs (19 percent).

"Interland's latest research reinforces the growing importance of Web sites to small businesses," said Joel Kocher, chairman and CEO of Interland. "As more and more consumers connect using the Web, it's vital that small businesses gain an effective online presence. This study shows that small and medium-sized businesses already on the Internet are finding it to be a true business tool, with 56 percent of those surveyed being able to attribute some portion of their annual sales to their online presence."

As part of the survey, respondents were asked about their expectations for online sales during the 2003 holiday shopping season. Of the group, 46 percent said that some portion of their holiday sales would be conducted online.

Of those expecting to see online holiday sales:

-- 22 percent report that their online holiday sales will account for more than 50 percent of their annual 2003 sales;

-- 11 percent say online holiday sales will account for 26 to 50 percent of total 2003 sales;

-- 17 percent say online holiday sales will account for 11 to 25 percent of annual sales; and

-- 50 percent say online sales will account for up to 10 percent of annual sales.

"Online sales are becoming an increasingly effective growth strategy for small businesses," said small business expert Kim T. Gordon, president of National Marketing Federation Inc. "Today, convenience is vital to time-strapped consumers, so it's essential for small businesses to have a true multi-channel marketing mix that combines online sales with traditional direct mail, catalogs and brick and mortar sales. The good news for small business owners is that multi-channel shoppers actually spend more than those who shop through a single channel alone."

When queried on their current and future use of e-commerce,

-- 38 percent of respondents said Web site visitors could purchase products or services from their Web site through either online payment transactions or via form mail or e-mail requests.

-- More than a quarter (26 percent) of those who don't currently sell products online plan to add e-commerce capabilities to their site within the next two years. Five percent plan to add e-commerce to their Web site in time for the 2003 holiday shopping season.

-- Of those that do sell products or services online today, 45 percent sell from one to five products online and 40 percent sell 21 or more products.

Other interesting data points from the study show that 68 percent of small and medium-sized businesses with a Web site use e-mail on a regular basis to communicate with customers, and 21 percent plan to offer online coupons or special promotions to online customers within the next year. Of the respondents, 37 percent say they update their Web site more than once a month and 38 percent say their business is not likely to do business with a company that does not have a Web site.

Conducted in early September, Interland's 2003 Holiday E-commerce Survey was an invitation-only, online survey for Interland's shared hosting customers. Of the 260 participants, 33 percent had been in business for five years or less, 25 percent for six to ten years and 42 percent for more than ten years. Company size ranged from less than $250,000 to more than $5 million in revenue; and 23 percent said their company Web site has been online for two or fewer years, 76 percent for three to nine years, and two percent for ten or more years. Fifty-seven percent of respondents reported having five or fewer full-time employees. More information about the survey, including downloadable findings, can be found at www.interland.com.

Interland, Inc. (Nasdaq: INLD) is a leading Web hosting and online services company dedicated to helping small and medium businesses achieve success by providing the knowledge, services and tools to build, manage and promote businesses online. For more information about Interland, please visit www.interland.com.

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