(FORTUNE Magazine) – By all accounts, this will be the biggest holiday season ever for shopping on the Internet. Those who make a living predicting such things say consumers buying gifts online will spend as much as $9.5 billion this year--more than triple what they laid out during Christmas 1998, which analysts christened the first e-holiday.

Glad tidings for e-commerce companies, right? But there are some killjoy details. Sites will have to accommodate more traffic than ever before, and some will not be up to the task. Last Christmas, as traffic increased, customer satisfaction declined by some measures, a sign that shoppers were not happy with system glitches caused by unprecedented crowds. Well, this year's online crush will include as many as ten million newbies, consumers shopping online for the first time. You can see where this is headed. Not to rain on the fin de siecle e-holiday parade, but we bet that more than a few shoppers this season will have an e-letdown.

The case for shopping online is compelling. You can save time by avoiding crowded malls. You can save money, thanks to shopping bots that troll the Web to find the lowest price for that Sega Dreamcast. Merchants are selling items below cost because they so badly want you to be their customer and are adding all kinds of money-saving incentives, from free shipping to free gift-wrapping. Shopping online is convenient--you can do it day or night, in a tux or naked or in drag. The Web's global bazaar lets the fashion-deprived in Provo, Utah, purchase items from London boutiques. Sounds splendid, doesn't it? But what happens when things go wrong?

Just ask John Fearnside, an engineer at Excite@Home, who last year challenged himself to have an "Internet Christmas," meaning he set out to buy all his gifts online, from CDs and books to a set of kitchen knives for his mom. About those knives: Two weeks before Christmas, he ordered a Henckels set from a mom-and-pop Web retailer. Right away, Fearnside says, he got a notice saying his order had been processed. A week later, the company sent an e-mail that reconfirmed his order--and mentioned that the set would be shipped in two weeks. By that time, his mom's Christmas tree would have been hauled off by recyclers. Luckily, Fearnside got one of the proprietors on the phone ("I wasn't about to trust e-mail," he says) and persuaded him to ship the knives overnight.

Face it--despite advances in technology and the IPO millions that many retail Websites are spending to beef up performance, we're a long way from an e-commerce shopper's paradise.

Last year's Web shoppers were early adopters; they may have been far more forgiving than this year's shoppers will be. If the new, pickier customers are not satisfied, analysts warn, they may never again shop at the sites that offend. According to market-research firm Jupiter Communications, the busiest sites may process an average of 58,000 transactions per day in November and December--double the traffic of last year, when many sites couldn't keep up with the pace.

"Real people and imperfect technology are about to collide," says Nancy Kramer, CEO of Resource Marketing, a Columbus, Ohio, consulting firm that evaluates e-commerce sites. She expects that some sites will have to shut down temporarily because they're overwhelmed with the volume; that there may be product shortages; that other sites' handling of returns will be unsatisfactory; and that the bad memories of customer-service glitches will be hard to erase.

Of course, many shoppers will be pleased with their online shopping excursions. There are nice things to say about e-commerce that we'll get to later. But first, in the spirit of offering a sober reality check, we list things shoppers hate:

1. It's still too hard to find what you're looking for. Even if you know what you want to buy and you simply need to find a site that has the item in stock at a decent price, using the Web is not simple. Say you're planning to buy your nephew a Sony PlayStation. You can try looking for it store by store or go to the shopping section of a portal, like Yahoo or Excite, and search from there. But search engines can't read your mind and won't understand that you are looking for the game console. Asked for PlayStation listings, Yahoo returned more than 1,300, including many games and other accessories. The results from Excite's "shopping search" weren't even shopping links; they mostly directed me to reviews and articles. It wasn't until later that I noticed that Excite has a separate button for product or price comparison searches. Sheesh.

When portals offer price comparisons, they're typically not complete; the portals list only links to their partners, e-merchants that have paid to be listed. Same with comparison-shopping engines, like MySimon. Its price comparison at the beginning of October was helpful but listed only three merchants with a PlayStation for sale.

According to Resource Marketing, of the 45 sites covered in its most recent analysis, more than three-quarters enabled users to type in search requests, but less than one-third of those generated relevant results. Searching in categories like consumer electronics, books, CDs, videos, and DVDs is relatively straightforward. But if you know your mother wants a cashmere scarf, say, you're not likely to fare as well.

Web shopping will be more enjoyable when searching becomes more intelligent. For books, videos, and music, a comparison service called DealPilot is impressive. It lists results by total price, including tax and shipping. If only it worked for stuff like computers, clothes, and cars.

2. Once you find what you want, it's still hard to see what you're getting. This is especially true of clothing or items that aren't mass produced. Some merchants, like Gap, provide closeup photos of buttons and stitching on some items so that you can get a better idea of what the clothes really look like. Subtleties of color and texture often don't come across well on the Web. Until some genius figures out how to transport the cashmere scarf digitally, you won't be able to touch it. Many companies will mail swatches of a fabric, though such policies rarely extend to leather or cashmere--and these expensive items are the ones you'd probably most want to examine.

Another drawback: You can't try things on. Sizing can differ hugely from style to style, even in the same brand. Technologists are racing to develop software that allows you to enter your measurements and create a model of yourself--a kind of virtual dress-up doll on which to try clothes. (Lands' End has a rudimentary virtual fitting feature for some women's items.) Yet using such models will never replace actually trying on clothes.

Misplaced expectations about products displayed on the Web can lead to disappointment. Kelly Mooney, director of intelligence at Resource, cites a bouquet of flowers that looked lush in a photo on PC Flowers & Gifts' Website. When the bouquet arrived, it turned out to be only eight inches high and wilted. An azalea touted as "two gallons" turned out to be a runt in a four-inch pot--more like pint-sized.

But there's always the bright side. For some items, shopping online is superior to shopping in a store. Stores can carry only so many items, but the best Websites, like Amazon.com, can offer millions. For example, music stores have listening stations for just a few CDs; if you're curious why rock fans are jazzed about the Shaggs, chances are that the band's CD won't be available on a listening station (it's probably not even in the store). On Amazon.com, however, you'll find samples of several Shaggs songs, as well as samples from most of the hundreds of thousands of other CDs Amazon carries.

Once broadband networking becomes prevalent, merchants will extend the browsing experience to more product categories. Clothiers will give you three-dimensional views of their wares and offer virtual try-ons. You'll be able to preview movies without enduring painfully long downloads or poor streaming quality.

3. Customer service still stinks. In the brick-and-mortar world, customer service is paramount. On the Web, it's often an afterthought. Startups seem more interested in putting up a pretty shopping site so that they can go public than in doing what retail is all about--satisfying customers.

Consider some of the statistics Resource culled in its recent study: Of the 45 sites tested, only 60% bothered to respond to customers' e-mail inquiries. Fewer than ten sites had prominent guarantees offering full refunds to unsatisfied customers. Only one-third of online retailers with brick-and-mortar outlets would accept returns at the stores. Only 30% of the sites had real-time inventory look-up, essential for checking whether an item is in stock.

Bill Bass, vice president of e-commerce for Lands' End, says customers will expect better this year: "Last year it was okay to respond by e-mail. This year, customers expect to get help instantaneously. If you can't provide the service, you're going to lose the customer." Lands' End has worked with Web-line, a customer-service provider recently acquired by Cisco Systems, to build a customer-response system. If you're lost on the site or can't find what you want--or if you simply want gift-giving advice--you can click a button and a salesperson will call you right back. (You do have to type in your phone number.) The salesperson can even take control of your browser and guide you to the most luxurious cashmere sweater, for example.

Several companies, including iBeauty and PC Flowers & Gifts, offer a similar callback feature from LivePerson, a New York City company. But as of this summer, when Resource Marketing did its sleuthing, having the application didn't necessarily translate into good service. The Cosmetics Counter (now called iBeauty) was busy when Resource called. When the researcher left messages on both the LivePerson feature and the company's 800 number, the merchant never responded.

Laurie Windham, CEO of Cognitiative, a Net strategy consulting firm based in San Francisco, says whizzy features like live callback are nice to have, but merchants should focus first on basics--like download times for Web pages. Among the 200 Web consumers surveyed for Cognitiative's quarterly "Pulse of the Customer" report, the No. 1 reason that customers got fed up and took their business elsewhere was technical problems, including unacceptably slow response times. "That happens before they even get to customer service," says Windham.

Making customers happy is crucial for Web merchants; if poor service drives customers away, they are generally gone for good. Cognitiative asked its panel what an offending Website could do to win them back. "The No. 1 answer was 'Nothing,' " Windham says.

4. E-commerce sites and their brick-and-mortar siblings typically operate on different planets.

Talk about a disconnect. Many companies with both a Web presence and regular stores run those businesses in splendid isolation. Send someone on your list a gift from CompUSAnet.com, for instance, and the recipient may be surprised to find it can't be returned or exchanged at a CompUSA store. CompUSA isn't unusual; savvy Web shoppers take time to check a merchant's return and exchange policies before they buy.

Some sites are notable exceptions. When Mooney bought stationery from the Brooks Brothers Website, a Brooks Brothers store clerk accepted her return--even though the stationery isn't carried in the stores. "It was clear they didn't have the system in place to handle our transaction, but they were wise enough to know they should," Mooney says. "You're buying from a brand, so you should be able to return it to the same brand, regardless of the channel."

Lack of integration between brick-and-mortar stores and their online counterparts extends beyond returns. You can sometimes find a book at barnesandnoble.com for 50% off that sells for just 20% off in the stores. Other merchants simply blow their Web opportunities. Fearnside--he of the knives--recently wanted a toaster. There was a Williams-Sonoma shop near his house, but he tried checking out the toasters online first. The Williams-Sonoma site was a letdown. "They had this beautiful Website but with no product or price information on it, not even an e-mail address," he says.

5. Privacy policies are cryptic and hard to find. One of the miracles of Internet technology is that Web merchants have the power to gather incredibly detailed information about you. They know where you live. They know your telephone and credit card numbers. They can track not only what you buy but also what you looked at along the way.

The good news is that consumer fears of thieves' pilfering credit card numbers sent via the Net are way overblown. Many merchants offer secure connections for online ordering. In the unlikely event that someone does grab your number and goes on a spending spree, by federal law you're liable for only $50 of the theft. Many e-tailers promise to reimburse even that $50.

The bad news is that a lot of sites don't respect customers' privacy. It's a nuisance every Web user knows: Order from a site, fill out an online survey, or merely browse, and you can find your e-mail box swamped with unsolicited advertising and other junk.

Call it e-commerce's dark side. So great is the presumed market value of sneakily gathered customer information that Web merchants traffic in it--even though many of their customers hate the intrusion. Result: According to Jupiter Communications, fully 64% of Web customers distrust Websites. Spamming customers, or selling their data and e-mail addresses without permission, is a good way to lose them. Windham says 28% of her respondents disliked e-mail sales pitches so much that they avoid the merchants that send them.

Most sites do have privacy policies. But they're often difficult to find, and when you can find them, a surprising number basically inform you that you have no privacy. A startup in San Diego called Enonymous.com has created a small piece of software that tracks these policies for you. It awards its highest rating, four stars, to sites that contact you only with your permission. The lowest rank, one star, means a site will share personal data about you behind your back. Of the top 20 shopping sites (as rated by Media Metrix), seven merited only one star.

The privacy battle is likely to go on. Some companies offer "cloaking" software that prevents Websites from identifying you when you surf. But if you want to buy something, you're stuck. You have little choice but to come out of the shadows and cough up your data.

Now for the happy thoughts.

There are plenty of things everyone loves about e-commerce when it works. Shopping online can be like having a personal assistant--someone to do the selecting, gift-wrapping, packaging, and mailing. Some sites let you add a gift card with a private message. Sparks.com, a San Francisco startup that sells greeting cards, will even hand-print your message. (Your great-aunt probably doesn't know what your handwriting looks like anyway.)

If you need help finding the right gift and want to take the boutique rather than the strip-mall approach to shopping, there are cool sites that offer unique, often affordable, items. Violet.com's selection isn't huge, but picking one item can be a challenge because the site carries such good stuff, from cozy-looking chenille throws to handmade Chinese teapots. Bestselections.com is a collection of boutiques, mostly in Aspen and London, where you can find bizarre gifts like a fisherman's sweater for your pooch ($80) or a deer-head sconce ($122.50). Some sites offer recommendations from editors; others ask a series of questions to help you narrow your search.

If you still don't know what to get, you can venture toward Flooz.com or another gift-certificate site. So-called flooz gift dollars are honored by more than 30 sites, including Tower Records online and FogDog sports. Sparks.com will include gift certificates in its cards.

Your gift recipient can save you from fretting over what to give by filling out a virtual wish list. Several sites, including Amazon.com and Drugstore.com, have registries. Alternatively, you can go to WishClick, which prides itself on being a universal wish list. It doesn't actually sell anything but rather directs you to sites that can take your order, which saves you from trekking to Amazon.com for one list and Lands' End for another. So far, WishClick is unique, but rival universal wish-list sites--including wishlist.com--plan to launch soon. Della & James, an online wedding-gift registry, plans to offer a general gift registry for those who aren't planning nuptials.

As the holidays near and sites try to lure you, there will probably be bargains galore: free postage, free items with purchases, free gift-wrapping. But if you're planning to shop online, here's one last piece of advice: Shop early to ensure that the items you want will be in stock and will arrive in time. "If you're a last-minute shopper, you're better off going to a store," Kramer says, "because you're guaranteed the gift in your hands is the gift you'll give." That's the crucial guarantee that the nascent world of e-merchants can't yet make.