e-commerce | by janice barbosa

Remembering the Ghost of Christmas Past

Now that the honeymoon is over, can e-tailers make the marriage last?

Like an estimated 41 million others who went online to do at least some of their holiday shopping in 1999, my husband and I began with high hopes and an open pocketbook.

Amazon.com was “buying the business” by flooding the airwaves and offering $10 bounceback coupons with every purchase. They didn’t profit much from our visits, but they wrapped and shipped our gifts on time to relatives across the country. No problem. 

But “buying the business” has become a thing of the past. Amazon.com’s stock tumbled 18% in July when it was reported that they planned to spend $140 million in preparation for the second half of 2000.

Our online buying spree continued pleasantly enough (wal-mart.com, ebay.com, miscellaneous small “e-tailers”) until we came to the wireless speakers.   First, the home-grown electronics website we chose failed to tell us that the wireless speakers were “remanufactured.”  We would receive a refund for the product as soon as they could process the paperwork. (It arrived in February.) Turning to iQVC, we suffered through two shipments of the wrong product.  Giving up, we made a Christmas Eve trip to a local electronics store and bought a boom box. 

We were far from alone. Andersen Consulting recently reported that 40% of U.S. web buyers experienced problems with e-tailers during the 1999 Holiday season.   They didn’t have a problem with the runaway e-commerce ad spending boom that created a record 4th Quarter for most major media.  No, it was the “little” things like quality, ease of navigation, low prices, convenient return policies, customer service and quick delivery that frustrated online buyers.

While Wall Street, investors and consumers have all been chastened by the lackluster performance of e-tailers who failed to focus on customer satisfaction and running a profitable business, most industry-watchers are certain e-commerce will survive…and thrive.

Nielsen NetRatings reported in October that 20% of all Americans, or 55 million, will do some holiday shopping online this year.  That’s an increase of 14 million over 1999.  And sales are expected to increase from $7 billion to $11.6 billion, according to industry analysts Jupiter Communications.

E-tailers are shifting their focus from attraction to retention.  To develop staying power, many e-tailers have spent the better part of 2000 making their sites easier to navigate and beefing up their back-end infrastructures to provide quick and accurate order fulfillment and customer support systems.

“I do believe that this holiday season we will see stronger performance on the customer service and fulfillment side,” says Jupiter’s Ken Cassar. He predicts the focus will be on customer acquisition and retention.

However, achieving holiday success is a daunting task for Internet “pure-plays” (i.e., sellers for whom the net is their sole sales channel).  They lack established brands and loyal customers.  With investment sources drying up, pure-plays are fighting to resolve the fulfillment and service problems that plagued them last year. 

Analysts continue to predict that the “click-and-mortar” model (store-front operations with an online presence) will come to dominate the e-commerce landscape.  With established infrastructure and ready capital, these brands offer consumers the best of both worlds, as well as the all-important trust factor.

Like most online “veterans” of Holiday 1999, I’ll be wiser this time around.  In fact, 3 out of 4  who will purchase online this season have purchased online for at least a year or more.  We have faith in the future of e-commerce.   And it’s up to e-tailers to prove to us that they are worthy of our continued faith if they want this relationship to last.

Janice Barbosa is Vice President, Internet Marketing Director at Bernstein-Rein Advertising, Inc., Kansas City, MO.  BR’s Interactive division provides internet marketing leadership, internet services and integrated solutions to clients in retail, B2B and packaged goods.Phone:816.960.5319. e-Mail: janice_barbosa@bradv.com.