As we approach the (true) new millennium, a lot of e-commerce sites are perched precariously on the fence, with experts unsure which way they will fall. To one side is profitability, to the other bankruptcy.
Holiday season is traditionally the make-or-break period for a great many retailers since a disproportionally large percentage of sales occur during the weeks around Christmas. A bad season can snowball into corporate mayhem, a good one can remove the last foot from the grave.
Last year’s e-commerce holiday season was not a good indicator of the future for several reasons, not the least of which was Y2K. Canadian shoppers were a little leery over the uncertainly of the Y2K transition and spent less as a result. The other big factor was the newness of shopping on-line. Only a small percentage of Canadians were both connected and willing to participate.
This year looks to be different. The “coolness” factor is gone, but so is much of the trepidation that surrounded on-line shopping last year. Will holiday season 2000 be the barometer to indicate the future of e-commerce in the retail world? Will packages arrive on time? Will stock hold out?
If the statisticians are to be believed, this year will be huge. An Ipsos-Reid study predicts Canadian on-line spending to double this season, to a half-a-billion dollars. But this will still represent a small fraction of total holiday gift buying. For the remainder, it’s off to the mall.
ComputerWorld Canada spoke to some retailers to get their read on how the 2000 holiday season is looking, and the levels of optimism varies substantially.
On-line buying to rise sharply
Responses ranged, but the consensus was that 2000 should be a good year in terms of Web site traffic, on-line purchasing and front- and back-end systems alleviating shipping snafus.
“It is too early to tell but I do think it is going to be a really great season because last year, at least in Canada, was the real first season of e-commerce for Christmas,” said Kathy Bennett, marketing manager at Sam’s On-line Inc., the on-line portion of Sam the Record Man in Toronto.
She said people are becoming more comfortable and familiar with Internet technology and are turning to the Web as an alternative means of shopping.
For its part, Sam’s just redesigned its site to give it a cleaner, more intuitive look, she added.
Future Shop, the Vancouver-based electronics giant, has spent a great deal of the last 12 months revamping its entire system. (“Retailer looks…” CWC, Nov. 3, 2000, page 6.) “It was integrated last year but we have integrated it more this year,” said John Verrier, director for e-commerce technology for Future Shop.com in Vancouver.
He said orders have already tripled in the past month, but come December e-commerce should really take off.
“We are modelling [the network] on 20 times what we did last year,” he added.
The Hudson Bay Company is no stranger to the holiday season since it has seen more than 300 come and go. But with more than 30 decades in the bricks and mortar world, the company is moving slowly into the virtual one.
“We are counting on this fall [as] fairly low key,” said Dave Alves, general manager for merchandising and marketing for hbc.com in Toronto. “There is not a lot of marketing behind it. We are building this not for this Christmas but for the next 330 Christmases,” he explained.
arrival before the 25th is key
With horror stories from last year about gifts arriving after the New Year or even not a all, on-line stores are paying particular attention this year to guaranteeing deliveries make it to homes on time.
Future Shop’s front-end server is linked real time against inventory to avoid selling something that is not there. “So when a customer places an order we actually reserve that inventory in the warehouse,” Verrier explained.
Once a purchase has been authorized, the product goes onto the conveyer belts at Future Shop’s huge Toronto warehouse.
Sam’s is also convinced its on-line fulfilment system will be able to handle the increase in traffic.
“We are pretty confident that it should be smooth…we have the systems in place, we have a new fulfilment system that is pretty robust and should be able to handle Christmas,” Bennett said.
Hudson’s Bay’s hbc.com is also ready. “We have tested the infrastructure [at] both the warehouse and the [Web] site…to the capacity of 10,000 buyers on the site at the same time to see what kind of demand it would put on the system and it is still running on single-digit capacity,” Alves said.
Future Shop has cut off dates to assure Christmas arrival are Dec. 13 for ground shipment and December 17 for air. “We had the same dates last year and we didn’t have any problems, but the orders are going to be a lot more [this year],” Verrier added.
Sam’s cut off dates are both two days later but, admittedly, the vast majority of its products are smaller and a bit easier to ship. hbc.com’s cut off dates have not been announced yet.
Of course the guaranteed way to assure delivery is to do it yourself. Joanne Walter, vice-president of future retailing solutions at NCR Corp. in Atlanta, said a return to shopping malls is a distinct possibility this year.
“A lot of shoppers missed the holiday feel from being on-line and though they avoided the crowds they missed some of the nicer parts of shopping as a social event,” she said.
“You do see more families going out as a way to be together.
“It is not to say the Web doesn’t play a role, it does, but around the holiday season where people want to pick out the gift wrapping, pick out the present, get in the whole atmosphere of it, there is a little bit of swing toward that traditionalism that the in-store experience gives you,” Walter said.
“On-line is one-at-a-time shopping and it is not always conducive to group activity,” she added.
Even today’s youth, an obvious target market for on-line retailers, is becoming jaded towards the Internet. A recent front page National Post article led with the headline, “Youth grow bored with Internet,” which does not bode well for future e-tailing.
Walter said a lot of youth use the Internet at school to the point that shopping on-line has lost any cool factor it may have had last year.
oh, to be a click and mortar
Stores with both an on-line and brick-and-mortal presence seem ideally positioned.
“It is a huge advantage not only for mixing the experiences but always giving customers what they need,” Walter said. “One thing the retailer offers is a relationship, a personal human interface in the store.”
But you may get the interaction but not the information you really need. “The one thing that stores lack today is detailed product knowledge.”
In response to this, there is an increase in the number of Web kiosks in stores so customers can browse and get specific product information. Another big plus during the holiday season is returning items. All of the companies spoken to allow on-line purchases to be returned to stores, avoiding the hassle of having to mail an unwanted CD or book back to a store instead of dropping by on the way home.