Retailers Want To Catch An Online Holiday Wave.
Predicting the fortunes of retailers this time of year is always great sport among industry pundits. This year, the experts have already warned manufacturers and retailers that they should take a volatile stock market and even El Ni-o-inspired temperamental weather into account when stocking their shelves.
After a disappointing Christmas in 1996, retailers such as Macy’s and J.C. Penney, and manufacturers such as Estƒe Lauder and DirecTV are opening up outposts in cyberspace to pull in incremental sales. And they’re not alone. There are incentive programs galore, some of which involve major credit cards, to entice people to browse and buy online.
The efforts of these companies indicate that the fear of shaky Internet shopping security may be the Ghost of Christmas Past. But the specter of Christmas Present is mounting competition for the still small pool of willing wired shoppers.
Jupiter Communications predicts online commerce in the consumer sector will reach $2.6 billion this year; it is expected to jump six-fold by 2000. That’s barely a blip when considering overall retail sales, says Merrill Lynch analyst Gerri Sommers. She says that the firm is predicting a $55 billion Christmas for retailers in ’97, up 5.6% from last year. But Internet sales will hardly be a factor, she adds, citing such issues as nagging consumer fears about credit card security and dauntingly-slow downloads.
Still, the ultimate mainstream retailer, Macy’s, isn’t taking chances when it comes to trying to reach its market out on the Web. In support of its second holiday season online, the retailer has purchased its first banners to promote macys.com and a gift-giving program, “Bright Ideas.” Susan Finkelstein, vice president of special services at Macy’s West, considers online shopping “an untapped, major [business] possibility.”
New York-based cosmetics company, Estƒe Lauder, sees the Internet as opening up the opportunity to sell its products to frazzled shoppers. On its Clinique.com site, an online gift-referral and ordering program, “Clinique’s Busy Women’s Guide to Hassle-free Holidays”, allows women to register for Clinique products, and email gift requests to up to three gift-givers, who can in turn order it without ever setting foot in a store. Another potential market? Men looking to buy holiday gifts for the women in their lives. “There’s certainly a broader appeal here,” says Angela Kapp, Clinique’s vice president of special marketing and new media. “Walking up to the cosmetics counter certainly may not be on the top of husband number one or boyfriend number one’s list.”
Still, Kapp cautions, it is just a pilot program. “Nobody has ever convinced us that buying cosmetics online is the next killer app of the Net,” she jokes.
Electronic commerce may never wind up being the online revenue panacea many sites hope it will be. In the mean time, digital shopping is destined to pop up in some unlikely places.
Santa Clara, Calif.-based Quote.com, a provider of stock quotes and financial information to 125 sites, has decided to take advantage of the robust traffic it saw on its site during the stock market’s recent roller coaster ride. It plans to launch an online store this month called “Gifts & Commerce.” The area will allow Web surfers to order everything from a bottle of wine, courtesy of Virtual Vineyards, to possibly even a pair of Gap pants.
The details are still being worked out, but Quote.com intends to have its retail partners handle the order fulfillment. The vendors would set up shop on the site for a three-month stint and pay for 100,000 impressions per month at or near the $35 CPM rate, says Scot McLernon, Quote.com’s national director of advertising and sales.
“If these are people that are online-savvy enough that they’re moving around, on average, $15,000 on each trade, then they should have no problem moving around $12 for a CD or $15 on a bouquet of flowers,” McLernon says.
Quote.com isn’t alone. Hearst New Media and Technology’s HomeArts Network plans to launch “Go Shopping,” an expanded and renamed commerce area next week. It will offer wares from companies such as Crabtree & Evelyn and J. Crew.
The explosion in online shopping options is sweet music for credit card companies who are aggressively recruiting vendors to push their cards for transactions. Visa has teamed recently with Yahoo on a directory of member merchants. MasterCard has assembled a number of online partners, including Wal-Mart and American Airlines.
American Express has gone a step further, teaming with Irvington, New York-based Internet promotions specialists, Yoyodyne Entertainment on EZSpree, a sweepstakes, launching in December, that dangles a $100,000 online shopping spree to contestants who visit the sites of its current roster of 191 participating merchants. The company believes the time is ripe to establish American Express as a secure online transaction currency for the youngest generation of card holders and new online merchants.
The Internet looks like one Christmas banquet where the company won’t dine alone for long.