IQ News: Holiday E-Commerce Clicks

Shoppers, merchants get ready for an online Christmas. Fighting for parking spots with little old ladies. Standing in line for hours. The Muzak version of "Rudolph the Red-Nosed Reindeer." Spray-can snow on store window panes. Any one of these is enough reason to make holiday shopping at the local mall an unbearable experience for many generous gift-buyers who otherwise are full of Christmas cheer. This could be why retailers and industry experts expect 1998 to top last year's online holiday retailing total of $1.1 billion by a landslide. As electronic commerce on the Internet matures, shopping from home offers a widening range of possibilities, including not just online staples such as books and music, but clothing from such well-known brands as Levi's, food and electronics. "There's a lot more stuff to buy and twice as many people online," explains Andy Sernovitz, president of the trade and lobbying group the Association for Interactive Media in Washington, D.C. Jupiter Communications also predicts a huge jump in spending. According to Ken Cassar, a digital commerce analyst at the New York-based online research firm, holiday-related e-commerce "... will be about $2.3 billion in sales, 47 percent of the year's sales in non-travel categories." He attributes the rise to "the natural growth of the channel" as well as "efforts that merchants have made" to promote the medium. Underscoring Jupiter's prediction is a recent poll by Dell Computer and Louis Harris & Associates, which found 43 percent of Americans who use computers said they were likely to shop on the Internet this holiday season--a whopping 330 percent increase over the 1997 holiday season, when 10 percent shopped online. Therefore, the major online venues are ho-ho-hoing with commerce-related promotions, and decorating their sites with digital tinsel. America Online is offering gift finding services and product discounts. And Yahoo! last week launched Yahoo! Shopping, an online mall with 14 product categories. Furthermore, most major online retailers have already started their holiday promotions. The Disney Store Online (www.disney.com) and The Store at ESPN.com (www.store.espn.com), part of the Buena Vista Internet Group, both are offering online gift certificates, personalization and exclusive memorabilia, as well as a gift-finder. Jenkintown, Pa.-based CDnow has created a Custom Shop where users can make custom CDs of holiday songs. CDnow also will sell Custom CD Gift Cards on television via shopping channel QVC. And advertisers such as Sony PC and 3Com have bought out the sponsorship inventory on CNET's Holiday Shopping Guide for high-tech gifts. In addition, Macys.Com announced the relaunch of its site last week--just in time for the holidays, and then there's the debut on Thanksgiving of everything4less.com, a massive discount site that is being supported by a $100 million ad campaign. But if there were any doubts that shoppers would find their holiday needs online, several efforts are underway within the industry to make the experience easier and to allay any credit card security concerns. Among the boldest initiatives is National Online Shopping Week, which kicks off the day after Thanksgiving, and is being run by online retailing trade group Shop.org, Silver Spring, Md. "Last year was what I consider the bell going off that says, 'Hey, online retailing is really catching on,'" says Robert L. Smith Jr., executive director of the organization. Shopping Week creator Jerry Shereshewsky, senior vice president of marketing at EZSpree.com, part of Irvington, N.Y.-based online promotions firm Yoyodyne, says before more consumers shop online, "There's this little chasm that people need to get past, whether it's a safety issue or it may just be top-of-mind awareness." An affiliated Web site, www.onlineshoppingweek.com, provides payment security information, advice about shopping online, links to participating retailers and an online shopping survey. Merchants' offerings include free shipping on items purchased during National Online Shopping Week, discounts, free wrapping paper, special gifts and donations to national charities. Participating merchant sites will display a National Online Shopping Week logo or run banners on their sites. "We want to make consumers aware that shopping online is a viable channel," says David Henderson, vice president of global advertising and interactive marketing at Purchase, N.Y.-based MasterCard International, a Shopping Week sponsor. Smith and other participants in Shopping Week stress that educating the public about measures taken to protect their privacy is key. "Quite frankly, given the amount of activity that's been going on, there really hasn't been the types of [security problems people expected]," Smith says. "What we're trying to do with this promotion is to do a better job of communicating to the general public what we as a community already know and understand." WinStar Interactive, New York, also has launched a service-oriented site, christmas98.com, which includes shopping links, recipes, decorating ideas, digital holiday cards, holiday entertainment reviews, travel ideas, places to make charitable donations, and traditions of Christmas, Hanukkah and Kwanzaa. Participating merchants include Great Foods, Hickory Farms, JCPenney and Dell. "We'll do really good traffic this year," predicts Bobbie Halfin, president of WinStar Interactive, of the site's sophomore effort. She adds that traffic has been higher than expected since its Oct. 1 launch. "Our site works because we have a combination of shopping, as well as some of the services people like." The heavy traffic also indicates that online gift shopping, once a novelty, is now a reason that people go online. Says Jupiter's Cassar, "The most interesting movement that I'm starting to see in the gift space is people that are catering to just gift buyers." Sites including 911Gifts.com, egift.com, by CyberShop International, and GiftGenie all cater to this market. Such rosy descriptions of the future of e-commerce make it seem as though the next step in the e-commerce revolution is the closing of the mall. Not so fast, says MasterCard's Henderson. "There's always going to be room for all those things to exist," he predicts. "It's a logical shakeout." Plus, e-commerce will always depend on the real world in terms of getting goods ordered online physically shipped to customers. This fact is particularly apparent now as pilots of Federal Express discuss going on strike Dec. 1. Smith says FedEx is the preferred carrier among merchants, but many have begun to seek alternative carriers, just in case. "We'll just have to keep our fingers crossed," he says.

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IQ News: Holiday E-Commerce Clicks

Adrienne Mand

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Adrienne Mand