|
Xmas marks the cyber-spot
|
 |
November 18, 1999: 3:19 p.m. ET
Consumers are poised to spend up to $15B during the '99 holiday season
By Staff Writer Rob Lenihan
|
NEW YORK (CNNfn) - Forget the Grinch -- this could be the year the Net stole Christmas.
The numbers vary, but surveys say consumers are expected to spend anywhere from $6 billion to $15 billion online during the 1999 holiday season, up from $3 billion to $4 billion last year.
Not much, perhaps, compared with total spending, which the National Retail Federation projects to be $184 billion this holiday season, but far ahead of the days when the Web was just a gleam in a geek's eye.
Both the bricks-and-mortar retailers and pure players want to stake their e-commerce claim. A wave of dot.com-mercials has inundated the airwaves as Net companies of every description try to harness the power of hype.
"This Christmas will be much more the watershed event" than last year, said Scott Mednick, chairman and chief strategic officer of Xceed Inc. (XCED), an Internet consulting firm. "This year has certainly seen the public consciousness inundated with e-commerce."
And the season already is jumping, according to Nielsen/NetRatings' new Holiday E-Commerce Index.
The study revealed a nearly 25 percent increase in unique visitors for the past six weeks, with toys, cybermalls and electronics showing the biggest boost in visitors.
What do Net shoppers want for Christmas? A lot more than their two front teeth, that's for sure.
Last year, online consumers had major issues with high prices and steep shipping costs. The Xmas '99 wish list includes cheaper shipping, more competitive pricing and an easier time finding the Web site.
"This year is very do-or-die," said NetRatings vice president Allen Weiner. "Two years ago, people blamed technology; last year they blamed customer service. We're running out of excuses."
Low tolerance for pain
Looming large over this Internet holiday season is the Ghost of e-Christmas past. Many consumers remember what happened -- or, more accurately, what failed to happen -- last year when they logged on.
In a survey conducted after the 1998 holiday season, Jupiter Communications (JPTR) said only 74 percent of respondents were satisfied with their online shopping experience. Just six months earlier, nearly nine out of 10 of those asked had a kind word to say about cyber-shopping.
Jupiter noted that as more mainstream consumers start shopping online, they will be far less forgiving of bugs, glitches, crashes, snafus or any other sort of Web site-related mayhem.
This year's Net shoppers will expect the Web to work with the same level of efficiency as their televisions, VCR's and electric can openers.
Kim Miller, director of Internet strategies at Macys.com, the Web site for Federated Department Stores' (FD) Macy's, said the company is keeping the customer in mind as it makes the site easier to use, adding such features as a search function and zoom technology, which allows shoppers to get close-up views of products.
It now takes 50 percent fewer clicks to use the site than it did last year, and Miller said the number of visitors increased 100 percent.
"We're doing everything to make the site simpler," Miller said. "People don't have a lot of tolerance for pain."
Then there are other major retailers that have decided to sit out the cyber holiday season. Home Depot (HD) and Wal-Mart Stores Inc. (WMT) both are opting instead to get their sites in shape for the new millennium.
Jerry Shields, a spokesman for Atlanta-based Home Depot, the largest home improvement retailer in the country, said it will be expanding its Web site to include nearly all of its products.
"We'll be doing this in the first half of the year," he said. "Obviously, this undertaking is a pretty huge one for us. It's not something that we're going to try and get up for Christmas."
Wal-Mart is preparing to launch its redesigned Web site Jan. 1. While the world's No.1 retailer will have a holiday presence on the Internet, spokeswoman Melissa Berryhill said there's no need to go dashing through the Net.
"We were just more concerned about doing it right than rushing to do it fast," she said.
Melissa Shore, an analyst with Jupiter Communications, applauded the decision to hold off until after the holidays.
"Launching a site in November is not a good strategy," she said. "You won't have the experience and you won't have the kinks out."
Who are all these people?
Who's doing all the clicking? A study by Ernst & Young released last week said 59 percent of online shoppers are women, continuing a trend of more women buying online.
More than half of the shoppers surveyed are married and are between the ages of 30 and 49. Twenty-three percent are over 50 and 19 percent are 18 to 29 years old.
Online consumers are expected to spend about one-fifth of their holiday bucks on the Internet, a Deloitte & Touche survey found.
Web rookies will join the reindeer rush, with one million newcomer households making up 12 percent of the online holiday shoppers and spending about $150 apiece. Comparison figures from last year were not available.
Put that in your shopping cart
The Ernst & Young survey showed that the top gift categories have not changed from last year. Computers and related products still lead the pack, followed by books, compact discs, toys and video.
The five favorite sites, according to the survey, are Amazon.com (AMZN), barnesandnoble.com (BNBN), CDnow.Inc. (CDNW), BUY.COM Inc. and eToys Inc. (ETYS).
Stephanie Shern, global vice chairman of Ernst & Young's Retail and Consumer Products Group, said focused categories with the broadest offerings -- such as CD's and books -- will continue to lead the market this holiday season.
"Brands will succeed on the Web this holiday season," Weiner of NetRatings said. "Companies beginning to get exposure right now will have a major uphill fight to get brand recognition."
Ryan Alexander, Internet analyst at Wit Capital, agreed.
"We think that as traditional retailers increasingly migrate online," he said, "they're leveraging brands that have been established for years. Hence, as consumers migrate online, those brands are going to be familiar to them."
All my dreams fulfilled -- or else!
So you ordered up that special gift for the holidays and you watch the mail waiting for it to arrive. And you wait. E-tailers who don't ship quickly can find all their dreams nuked to a fare-thee-well by an inability to deliver the goods.
"Consumers may be forgiving of strong brand names," said Jupiter Communcations' Shore, "but virtual companies will face a more difficult time."
Some retailers look to outside companies for help in completing orders. Acton, Mass.-based Yantra Inc. provides fulfillment software for such e-commerce companies as iVillage (IVIL) and Petstore.com.
"We were asking [e-tailers] back in July and August, are you Santa-ready?" said Devdutt Yellurkar, president and chief executive of Yantra. "There's no customer loyalty if you screw up the order. The minute you drop an order, people aren't going to come back to you. And not only will they not come back, they'll tell other people."
Online luxury item store Indulge.com enlisted the aid of SubmitOrder.com, a Columbus, Ohio-based "e-fulfillment" company that helps Net retailers with everything from gift wrapping to shipping.
"As a start, we'd rather partner with someone who is an expert," said Jerry Brunk, vice president of operations at Indulge.com. "If you don't have the capability, why mess around trying to learn that on the dime of your customers?"
SubmitOrder.com President J.T. Kreager noted that many of the dot.coms spend a lot of money on order taking but forget about getting the stuff to their customers.
"It may be a virtual world online," he said, "but there's still a real world with real customers, and somebody has to take care of that."
Last site standing?
So, when the presents have been unwrapped and the artificial evergreens go back in the attic, who will be the winners and losers of e-Christmas '99?
Credit card companies should be in good shape, since e-shoppers pay for their purchases in pure plastic. Likewise, the delivery services -- such as Federal Express holding company FDX Corp. (FDX) and the freshly IPO'd United Parcel Service -- which deliver the orders that e-tailers take.
"The commerce players who have been online and have already gone through one holiday season are more likely to fall into the winner's circle," said Shore of Jupiter Communications.
Alexander, of Wit Capital, said bookseller barnesandnoble.com Inc. (BNBN) is successfully blending the real and the virtual by slipping online coupons into shopping bags as customers leave the bricks-and-mortar stores.
Alexander said Internet toy merchant eToys Inc. (ETYS) is benefiting from online brand awareness and both uBid Inc. (UBID) and priceline.com (PCLN) continue to perform well.
Hype and hoopla not withstanding, Peter Schwab, director of Ernst & Young's Corporate Finance Group for Retail and Consumer Products, said that, with the technology in its infancy, it is unlikely Cybermas '99 will be a make-or-break period.
"The capital is not going away from this market," he said. "It's going into this market very quickly. There's too much happening here for people to say, 'I invested, it didn't work, I'm folding my tent.' " 
|
|
|
|
|
 |
|
