E-tailers Will Share in Xmas Gifts
by Lauren Beukes
September 19, 2000
Christmas cheer should spread to Internet retailers this holiday season, as Web shoppers overlook concerns about security, privacy, late deliveries and the recent high-profile e-tailer deaths.
One of every three Internet users will make a purchase on the Net during the traditional buying mania leading up to the holidays, according to Forrester Research.
E-tail sales could climb as high as $10 billion, Forrester said in a report. That’s almost double the Commerce Department’s estimates of the $5.3 billion spent online in last year’s fourth quarter.
Jupiter Communications pegs online spending at $11.6 billion for the season, a 66% jump from last year, although some $2.6 billion of that total will go toward online travel spending.
But, while the growth rate looks phenomenal, it’s actually a deceleration from last year’s 126% rise from 1998. The playing field is leveling out, experts say, and well-established brand names and an emphasis on customer service will be far more telling indicators of e-tailers’ success than the millions in ad spending.
Jupiter predicts that this year e-tailers will spend less on advertising and focus more on marketing efficiency.
According to Web research firm, Gartner Group Inc., consumers will have little patience for late or lost orders and bad customer service, which were rampant during the last holiday season. And without consumer loyalty and repeat purchases, e-tailers will lose out on profits and fail to attract new business.
Already, several online retailers have fallen by the wayside. The most famous example, Boo.com, a hip European clothing retailer, blasted through more than $120 million before declaring bankruptcy just six months after its launch.
More recently, ClickMango, a natural health Web site founded by Absolutely Fabulous star Joanna Lumley, fizzled earlier this month after failing to find eleventh-hour backing, and Living.com, an online furniture store died in August.
Failing online ventures are nothing new in the wake of the dot-com crash. Neither are consumer concerns about using their credit cards online, especially after beauty supplies site Eve.com shut up shop temporarily last week when a security breach made the details of thousands of customer orders available.
Of new concern, however, are the privacy issues, brought to attention after Toysmart.com went bankrupt in the spring and tried to auction its customer data, despite promising its shoppers privacy. Other major retailers, including Amazon.com (NASDAQ: AMZN) have since amended their privacy policy so that their customer databases are considered company assets.
Still, despite the brouhaha in the media and from privacy groups such as the Electronic Privacy Information Center (which terminated its affiliation with Amazon last week), the lack of a major consumer backlash to date suggests that privacy isn’t a high priority for many Web shoppers.
In spite of security breaches, credit card fraud, poor customer service, faltering stores and even a disastrous pricing experiment from Amazon.com in which some buyers were charged more for exactly the same DVD, many e-tailers appear to be going strong, or at least taking steps in the right direction.
Jupiter believes that Web shoppers will head for the brands they already feel comfortable with, whether online, in the form of Amazon.com and its ilk, or the Internet counterparts of real-world chains such as Wal-Mart (NYSE: WMT) and Circuit City (NYSE: CC), both of which have been strengthening their brands online.
Barnesandnoble.com (NASDAQ: BNBN) replaced Amazon.com as Yahoo’s (NASDAQ: YHOO) premier bookseller (pushing the company’s shares up by over 30% today) when Amazon’s contract with the portal giant expired and both parties agreed not to renew.
Amazon is sticking to AOL.com (NYSE: AOL) as its major partner and today the online titan also signed a deal to license its controversial one-click technology to Apple Computer (NASDAQ: AAPL). The technology lets repeat customers buy items with one click instead of having to enter their payment details every single time.
Other news today included the launch of Style.com, a new fashion Web site by Vogue and W, that displays fashion news, gossip and pictures – and click-through links so upmarket style mavens can instantly purchase the hottest new fashions online.
Another fashion site, BlueFly.com (NASDAQ: BFLY) is barely limping along, but its competitor, Fashionmall.com (NASDAQ: FASH), recently bought the rights to Boo.com with plans to re-launch the site this fall – in time for the anticipated Christmas rush.
