History’s fine if you learn from it, and e-tailers that are making it this holiday shopping season are those that profited from last year’s experience – and will have enough stock, get their orders right, deliver on time and be able to handle a holiday surge of Web traffic to their sites.
The stakes are high, said Lisa Price, an e-commerce consultant and co-author of the recently published “The Best of Online Shopping” (Ballantine).
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According to Jupiter Communications and Forrester Research Inc. projections for on-line holiday buying this year range from $9 billion to $12 billion, up nearly twice that of last year’s $6 billion seasonal take. “Which is quite amazing,” said Price, of a practice that was in its infancy only four years ago, and “shows that people are having more confidence [in the Internet] than ever before.”
Recent research by Ernst & Young showed 38 percent of online households have made purchases online, and 52 percent of U.S. households now have access to the Internet.
But despite the evidence that online shopping is on its way to becoming mainstream, research by DataQuest found that one of every five consumers who bought online in 1999 complained about the e-commerce experience, many vowing never to return.
And according to this year’s “Consumer and Retailer Mood Survey” by Deloitte and Touche, slightly more than one in five (22 percent) of Internet purchasers said they had at least one negative experience in the past year – although an average of $264 will be spent online by Internet users this holiday season, an online share of more than one-quarter (28 percent) of their total budget.
Industry observers say poor service is the main obstacle to building an inventory of repeat e-tail customers, which means, said Ed Carey, global leader of Consumer Business Practice at Deloitte Consulting, that retailers need “to make shopping a more fulfilling experience, and that means putting an emphasis on better serving their customers – wherever they may be shopping.”
A big issue last year was delivery, and hefty fines were levied this summer by the Federal Trade Commission, which got lots of complaints last year about late orders – companies that promised packages by Christmas and didn’t deliver.
Seven online retailers including KB Kids, CDNow, Toysrus.com and The Original Honey Baked Ham Co. of Georgia settled for $1.5 million in civil penalties, along with their assurance that such violations would not recur this holiday shopping season.
Another “crazy notion” among e-tailers last year was that advertising was their only hope of being heard in a crowded Internet marketplace, Price said.
Some Net companies, according to Danny Rimer, managing director of research at Hambrecht & Quist, were spending as much as $100 million a year in 1999 to “rise above the noise of the Internet.”
But high spending campaigns don’t lead to the two components online companies need most – good branding and good relationships with repeat customers, Price said.
There’s such a thing as confusing getting an order with gaining a customer, and as an example she cited KB Kids.com’s spending $40 million on advertising in the last two months of 1999, a move that may have inspired increased traffic to the site but ultimately “didn’t work” and led their parent company to step in with layoffs.
Only the smart survive
Though the numbers are good, many e-tailers – especially recently – have succumbed to a sort of “Darwinian” weeding out, said Evelyn Somers, senior vice president of marketing at SmarterKids.com, citing the departure in the last several weeks of Pets.com, Furniture.com, Mother Nature and Eve.com.
“There’re definitely fewer sites around,” she said, which means better business for the smarter e-tailers that are left. “Customers vote very loudly with their dollars,” she said, which is why they work hard to keep them happy – coming in well into the 99 percentile of package delivery and a less than 1 percent holiday return rate last year. “Our customer base is one of our most precious assets.”
Other stalwarts like Amazon.com and eToys have consistently ranked highest in terms of customer satisfaction, said Price, with Amazon especially building a very loyal customer base – consistently ranking in the 97 and 98 percentiles in consumer satisfaction.
E-tailers that had their wits about them this year spent the first six months of 2000 updating their software and working out glitches in payment and shipping options, Price said, and Somers agreed.
“We’ve been planning since June,” in terms of designing their Web site and introducing new products, she said, even putting a “feature freeze” on their site last week so as not to confuse prospective shoppers with changes late in the season.
Online merchants need a fast start in the holiday season, since they have fewer selling days because of shipping requirements, and unlike malls, no last minute shoppers on Christmas Eve.
That means “you have to work very hard” to make up for “the lack of presence in the real world,” and stay in the forefront of customers’ minds, offline, Somers said. “You build the relationship,” she said. “It’s not just about price online.”
Smart e-tailers this Holiday 2000 are also zeroing in on women, Price said, who not only are the fastest growing segment of online users, but for the first time are on the Internet more often than men.
Women comprise 52 percent of online users today, Price said, and if you take away computers, women actually do 75 percent of all on-line shopping. Surprisingly, she said, the average female online shopper is 41, “not someone who grew up with the Internet.”
And women appreciate convenience. Companies that have redesigned their Web sites to save loading time will earn points with busy women who “don’t have time to spend all day in a mall.”
Another priority is returns, and while many companies, the “bricks and clicks,” stress to online shoppers the fact they can bring an unwanted purchase to their offline counterpart, “to me that’s like why bother,” Price said – if people wanted to “trudge out to the store” they would have done so in the first place.
The good e-tailers, like Nordstrom.com and eToys provide a mailing slip right in the box, postage paid, she said, “terrific customer service.” Many stores will also offer free shipping, Price said, but for those that don’t, she advises doing “as much shopping as possible at one store,” to save on delivery.
