Christmas 2000: Will e-Santa Claus Deliver?

Yes, it’s that time again. Consumers are making their lists and checking them twice, e-tailers are scrambling to make last-minute site improvements and venture capitalists are holding their breath.

Everyone’s bracing for Christmas 2000 – believed by many, including me, to be the make-or-break time for Internet-only e-tailers. Last year was the first true test, which most e-tailers failed miserably. But consumers are forgiving souls and have given online holiday shopping another chance. Heading into Christmas 2000, e-tailers must beware: While last year’s holiday mishaps were upsetting, this year’s will be unforgivable.

So did e-tailers learn their lessons last year? What e-tailing themes should we expect this year? Here are my top 10 predictions for how this online holiday shopping season will take shape:

The demise of last year’s leaders. In just one year the e-tail leader board has almost completely changed. Many of the best-known companies from last season couldn’t even reach the Christmas 2000 starting line. As recently as early November, pure plays, and conceded defeat. The tragic loss of the sock puppet shows that even great campaigns are useless in the face of rotten sales and unviable business plans. The few remaining winners from last year will stay on top in 2000 as consumers are drawn to the more established brands.

Bricks-and-clicks will rule. Last year’s mishaps caused the world to stop and realize something that never should have been doubted: Traditional retailers know what they’re doing. This Christmas, the biggest success stories will be integrated bricks-and-clicks retailers. The smart ones – those who will live to see 2001 – have combined traditional strengths with Web savviness. Winning retailers realize that the Internet is having a much bigger effect on retail than just providing a new sales channel. It is dramatically altering the way retailers communicate with consumers about what they are selling.

Smarter marketing prevails. After last year’s wasteful spending on big-budget TV ads, this year will see a lot more accountability. E-tailers (in some cases with pressure from investors) are getting smarter about how they spend their marketing dollars. This season we’ll see less money spent building brands and more on results-based marketing programs. Some of the smarter e-tailers will use the Web as a low-cost, highly effective way to reach targeted consumers. I’m not talking about spam e-mails but value-driven online promotions and direct marketing initiatives. In a survey conducted by last Christmas, consumers cited e-mail promotions as the most effective e-tail marketing tool.

Niche e-commerce opportunities emerge. This year will see the emergence of new niche e-commerce opportunities designed to capitalize on the Christmas frenzy. Examples include sites that offer post-Christmas liquidation, information aggregation and specialized discount and promotional services. SmartBargains, and CouponSurfer are just a few.

Better fulfillment. Fulfillment will remain a thorn in e-tailers’ sides but less so than last year. We’ve seen some big improvements: Customer service centers are staffing up, e-tailers are partnering with specialized fulfillment houses and delivery policies are clearer and more realistic. But the main reason I predict that fewer consumers will face delivery disappointments is that consumers themselves are better prepared. There will be less last-minute online shopping and less reliance on unknown dot-coms.

Smarter consumers. E-tailers can expect to see smarter, more demanding online consumers this year. Gone are the days when return policies are not checked and vague delivery details are accepted. Christmas 2000 consumers have much higher expectations and much less tolerance for error. This year, if they’re not 100 percent happy, they’re not buying.

E-tailing hits the mainstream. Last year, online shopping got the attention of the masses. This year, it will reach the purse strings of the masses. Despite the problems last season, an estimated 45 million consumers (according to eMarketer) are expected to purchase anywhere from $10 billion (according to Forrester Research) to $12.5 billion (eMarketer) online this holiday season. While this is still a small piece of the retail pie, it is becoming increasingly important. The key is Jupiter Communications’ much quoted statistic that for every $1 spent online, $8 is spent offline on purchases influenced by the Web, e.g., “how much will that box of envelopes cost, and where is the closest Staples?”

Privacy at the forefront. Online privacy and security concerns have been key barriers to getting more consumers shopping online. E-tailers will feel the impact of this as consumers will demand to know their privacy policies.

New but not improved sites. Many e-tailers who survived Christmas ’99 have been busy tweaking their sites to add new features and frills. The problem is there’s more fluff than substance. Retailers need to focus on ways to make it easy for consumers to complete the purchase. Site design that’s not customer-focused will result in many empty shopping carts again this season.

Strategic use of outsourcing. E-tailers are realizing they can’t do it all. In order to focus on what they do best, more e-tailers will outsource fulfillment and customer support services this year. This is still risky because e-tailers now have to rely on a third party to deal with their customers. Let’s hope their outsourcing partners can keep up.

I’d like to make one last prediction, this time looking further into the future to Christmas 2001. I think that this time next year the much overused term “e-tail” won’t even exist. It will be permanently removed from our lexicon as the world wakes up and realizes that it doesn’t even make sense – that e-tail was just retail all along. n

• Irwin Barkan is chairman of, Burlington, MA.

Related Posts