ANN ARBOR – Here we are in late October, with just over two months to go until Christmas. Once again we in the tech world will look to see what online shopping trends we can discern. For about the umpteenth time someone will declare that this is the year online shopping ?gets serious.? Of course, it?s been serious for a long time.
Remember how in 1999 you bought a gift online for someone and bragged about it later at a holiday party? No one would be very interested in such a tale today. That?s how you know online shopping is here to stay.
Overall, online shopping now represents about 7 percent of all retail in the United States. At this time of the year the analysts are all competing to make the most accurate prediction of what growth we?ll see versus last year. The guesses are all over the map because of recent events.
How much will Hurricane Katrina dampen Holiday spending? Will high gas prices mean people spend less this Christmas because they?re watching their pennies? Or will people avoid driving to the mall to save on fuel, and thus spend more online than they would otherwise? Your guess is as good as mine but all the indications are that online spending will be up about 20-25 percent this Holiday over last year.
Now, I?m confident all of you reading this have made a good start on your personal Holiday shopping. Yeah, right, sure you have! Well, that?s okay because the retailers haven?t finished getting their web sites ready, either. Everyone in retail ?knows? that they should have all the site redesigns and new launches complete by mid September at the latest but, in reality, many are struggling to get things wrapped up by Thanksgiving. The truth is that building and running a major consumer e-commerce Web site is a complicated business today, and many companies are finding they have more and more to do each year to get ready.
Many merchants start the Holiday preparation process by segmenting their list of customers to identify who their very best shoppers are. These are the people who come to the site most often and spend the most money. Often you can learn clues from their shopping habits that will indicate how the larger customer population will behave. For instance, some retailers email this premium list with offers for select products in early September.
By watching to see how this group shops you can make guesses about which products and offers will sell well later in the holiday season. If you send your best customers an offer for 15 percent off a Sony MP3 player, but you find they actually come to your site and buy an Apple iPod for full price instead, then you know which product you should be promoting at your busiest time in early December. (And you know which one you better be sure you have in stock.)
Industry experts know that ?multi-channel? retailers are the strongest players during the holiday season. Multi-channel is the buzz word for companies that sell through multiple channels, such as bricks-and-mortar stores, catalogs, and Web sites. Experience has shown that these companies are the most successful because (among other reasons) their customers can choose how they want to interact with them. Sometimes you might go into an Eddie Bauer store at the mall, for instance, and sometimes you might go to their Web site, but you get to make the choice. The famous dot-com busts like eToys.com and Pets.com were all ?pure plays,? and they died before they could develop multi-channel strategies.
So, multi-channel companies have an edge at the holiday season. But they also have a much heavier burden. Besides implementing all kinds of technology to integrate their channels together to have a ?common view of the customer,? they have to make sure all their channels communicate the same information. Have you ever placed an order online and then called customer service only to find they didn?t have a record of your order? Or maybe the Web site said it would ship in two days but the lady on the phone said it would take a week? Remember how mad you were? Multi-channel retailers have to work hard to avoid those nightmare situations.
That can be very time consuming and expensive. Unlike the days when you could develop an HTML site in a few days, a major Web site today is a large-scale software project with integration points into 15-20 different computer systems for inventory management, credit card processing, dynamic image manipulation, search engine optimization, in-store fulfillment, and a host of other things that are all designed to make the site easier for you to use. And each of those systems has to be tested. Gap.com made a big splash recently when it relaunched a brand new, cutting-edge site that has drawn a lot of praise for its innovative design. Unfortunately they didn?t test all their systems properly and the site has been up and down repeatedly over the last six weeks. They are now limiting the number of customers coming to the site to keep it from crashing. These problems have cost the Gap millions of dollars in sales and a lot of customer satisfaction, and the holiday rush hasn?t even started yet.
In the end this Holiday will be a big one for online retailers, just like the six or seven holidays before it. The Web has become an integral part of our shopping lives, whether we just research products online or actually use our credit cards to complete the purchase. But we?re a demanding bunch and it?s harder to satisfy us each year. It will be interesting to see which retailers earn our love this year and which ones end up on Santa?s Naughty List.
David Fry founded Fry Inc. in 1994 and has built it into one of the country’s most respected Web development companies, with extensive expertise in Business-To-Consumer eCommerce. For more information, click on FryMulti.Com
